ASIC recently released information sheets giving the view that SMSFs with a starting balance of $200,000 or less are not in the clients best interest and are more likely to be scrutinised. Let’s look at the reasons why this can be criticised and the benefits of a SMSF irrespective of the starting amount:
– Public Funds may not allow a specific type of binding death benefit nomination whereas trustees of an SMSF can specify this nomination which allows for a level of certainty when it comes to Estate Planning
– Certain strategies which can give a large increase to long term retirement income are not available in a Public Fund. LRBAs to buy direct shares and property is an example of this
– Focus on the long term costs and returns not the short term. 7 per cent fees in an SMSF with a 20 percent return is more beneficial than 2 per cent fees and 5 per cent return in a Public Fund over the same period
There is no evidence that a SMSF with a balance of less than $200,000 is less efficient or beneficial than a wealthy Public Fund. It’s all about what will be there for retirement in the long term and certainty for the trustees for Estate Planning, you don’t want your death benefit becoming subject to a public offer trustee’s payment policy. It’s not at all about how much is in the fund now!
At Bricks & Mortar Superannuation we can sit with you and look at what you have now and what you would like at retirement. Using our Retirement GAP calculator we can plan a strategy that suits you.
By Aletia Bowen, Co-Founder of Bricks & Mortar, part of the JWA group of companies