A self-managed super fund (SMSF) is a private super fund that you manage yourself. … When you manage your own super, you put the money you would normally put in a retail or industry super fund into your own SMSF. You choose the investments and the insurance.
SMSFs are different to industry and retail super funds.
An SMSF can have up to four members, who are friends or family. Most SMSFs have two or more. As a member, you are a trustee of the fund — or you can get a corporate trustee. In either case, you are responsible for the fund.
While having control over your own super can be appealing, it’s a lot of work and comes with risk.
Only set up your own super fund if you’re 100% committed and understand what’s involved.
The risks and responsibilities of SMSFs
All members of an SMSF are responsible for the fund’s decisions and for complying with the law.
These responsibilities come with risks:
- You are personally liable for all the fund’s decisions — even if you get help from a professional, or if another member made the decision.
- Your investments may not bring the returns you expect.
- You are responsible for managing the fund even if your circumstances change — for example, if you lose your job.
- There may be a negative impact on your SMSF if there is a relationship breakdown between members, or if a member dies or becomes ill.
- If you lose money through theft or fraud, you won’t have access to any special compensation schemes or to the Superannuation Complaints Tribunal.
- You could lose insurance if you’re moving from an industry or retail super fund to an SMSF.
SMSF finance opportunity here