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If you want more control over your retirement savings, a self-managed super fund (SMSF) could be the way to go. But if you’re new to the world of SMSFs, there’s a lot to learn about compliance and how to set up your fund properly. Here’s what you need to know.

What is an SMSF?

As the name suggests, a self-managed super fund (SMSF) is a super fund you essentially run yourself. Rather than keeping your super in a retail fund or industry fund and having it managed for you, with an SMSF you manage your own money. This means you choose your own investments and insurance.

An SMSF can have up to four members. Usually these are family members, but they don’t have to be. A common arrangement is for two spouses to be members of one SMSF.

SMSF benefits

Some of the biggest benefits of an SMSF include:

  • More control: you decide where your money is invested
  • Tax advantages: SMSFs are tax-efficient investment vehicles because tax on investment income is capped at 15%
  • Potentially lower costs: although set-up fees tend to be higher than other super funds, SMSFs can be more cost-effective in the long run, especially as your balance grows
  • Add value with property: you can grow your super by owning investment property through your SMSF
  • Pool your super: by pooling your super with up to three other members, you could be able to access investment opportunities you wouldn’t have been able to otherwise

SMSF drawbacks

Potential downsides to having an SMSF include:

  • Knowledge and time required: running an SMSF can be time-consuming, and you need to understand your compliance obligations
  • Higher costs: set-up costs tend to be higher, as are ongoing costs if your balance is relatively low
  • More risk: failing to comply with the law could lead to financial or legal consequences


How to set up an SMSF

If you want to take your super into your own hands, there are a few things you’ll need to do to set up an SMSF:

  1. Get professional support

Despite the name, you’ll need help from various people to set up and run an SMSF. This includes:

  • An accountant, tax agent or administrator to make sure you’re meeting your obligations with the ATO
  • A lawyer to set up the fund correctly and make sure it’s legally compliant
  • An approved SMSF auditor to audit your fund each year
  1. Decide on your trustee structure

You can be the sole member of your SMSF or you can be members with up to three other people. You’ll also need to decide whether you want an individual or corporate trustee structure.

With an individual trustee structure, your SMSF assets are registered in the name of the fund members. This is cheaper but can also come with more admin.

With a corporate trustee structure, your SMSF assets are registered in the name of a company. It’s the only option if you want to manage your SMSF by yourself. A corporate trustee structure is usually more expensive but also means less paperwork.

  1. Register your SMSF

You’ll need to register your SMSF with the ATO and apply for an Australian Business Number (ABN). You can find out more about how to register an SMSF with the ATO here.

  1. Open a bank account for your SMSF

You’ll need to set up a bank account in your SMSF’s name that is separate from all your members’ personal bank accounts. This account should be used for the fund’s cash flow, such as to pay fees and receive investment income.

  1. Roll over your super

If you have super in another fund, you can roll it over into your SMSF. You don’t have to do this, but it’ll save you from paying fees across multiple funds.

Your SMSF is set up. What next?

Once your SMSF is set up and ready to go, it’s time to decide where to invest your money. Unless you have a very in-depth knowledge of the market, it’s a good idea to get help with your investment strategy.

One of the cheapest and most reliable ways to do this is by using a robo-advisor such as Unhedged. Robo-advisors use artificial intelligence to analyse millions of data points and make 100% logical investments every time. This means you don’t have to know anything about the market, or pay big fees to a financial advisor, to run a profitable SMSF.

Ready to Invest? Get started with a free demo account.



Disclaimer: The information in this article is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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