Your Guide to Self-Managed Super Funds (SMSFs)- Part 2

3 Risks to Consider Before Starting an SMSF

While SMSFs offer many benefits, there are also risks that need to be managed carefully. Here are three potential risks to be aware of:

  1. Responsibility and Compliance: As an SMSF trustee, you are responsible for complying with all legislative and tax regulations set by the Australian Tax Office (ATO). Any breaches can result in severe penalties.

  2. High Starting Balance Required: SMSFs generally require a high starting balance to be cost-effective. The SMSF Association recommends a minimum of $200,000 to make the fund worthwhile.

  3. Time and Complexity: Managing an SMSF can be time-consuming and complex with administration and compliance adding to the costs.

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DISCLAIMER: THIS INFORMATION IS GENERAL IN NATURE AND DOES NOT TAKE INTO ACCOUNT YOUR PERSONAL FINANCIAL CIRCUMSTANCES, NEEDS OR OBJECTIVES. IT DOES NOT REPRESENT FINANCIAL PRODUCT ADVICE. YOU SHOULD ALWAYS SEEK INDEPENDENT LEGAL AND FINANCIAL ADVICE BEFORE MAKING A DECISION IN RELATION TO A FINANCIAL PRODUCT. YOU SHOULD CONSIDER YOUR OWN CIRCUMSTANCES, NEEDS AND FINANCIAL OBJECTIVES BEFORE MAKING A DECISION. BEFORE ACTING ON ANY INFORMATION YOU SHOULD CONSIDER WHETHER IT IS APPROPRIATE FOR YOUR SITUATION AND SEEK INDEPENDENT FINANCIAL ADVICE IF NECESSARY.