Australia's retirement savings industry is second to none. It forces our employers to put money away for us each in each pay packet, and we get to spend that money once we retire.
One of the pitfalls of superannuation for me though is the way you lose control of your money. It is your money, yet often someone (such as your employer and usually due to your own inaction) decides where your money is invested. For this reason, I set up my own Self Managed Superannuation Fund (SMSF).
Without getting into the legalities of it, an SMSF is a legal structure where you take on the management and administration responsibilities of your superannuation money yourself. Once you set up an SMSF, there are a number of responsibilities which need to be taken care of. You can be as involved as you like with these responsibilities, or outsource where you think it is appropriate. These responsibilities are as follows:
1. Trustee - The trustee is the legal owner of the assets of the fund. Basically it is the trustee who takes legal responsibility for the fund. If anything goes wrong, it is the trustee who gets the blame.
2. Administration - The administrator looks after all the book keeping and accounting responsibilities. They will prepare and lodge the annual tax returns and documents and ensure all the accounts balance at the end of each financial year.
c) Audit. Each year your superannuation fund should be audited to ensure it complies with the superannuation regulations. A successful audit will ensure you maintain your "complying" superannuation fund status and can continue to enjoy superannuation tax concessions.
d) Investing the money. Superannuation is retirements savings. Someone needs to make all the investment decisions within the superannuation regulations, in a way which maximises the future retirement benefits of its members.
In my situation, all I wanted was control over the investments. I wanted to manage where my money was invested and how much was invested. That way I always knew how much I had in my accounts (as opposed to waiting for the big surprise when my annual statement arrived) and I could feel comfortable knowing that my returns were well earned. They were my responsibility, so in the bad years when my investments fell, at least I wouldn't get frustrated that I had no control. It also afforded me the luxury of managing my superannuation investment as part of my estate rather than as a separate entity. This meant my entire portfolio was significantly more balanced, which is crucial for long term financial success.
I find all the other responsibilities to be very time consuming so I've outsourced them. This leaves me more time to analyse my investments properly and make better investment decisions.
One of the pitfalls of superannuation for me though is the way you lose control of your money. It is your money, yet often someone (such as your employer and usually due to your own inaction) decides where your money is invested. For this reason, I set up my own Self Managed Superannuation Fund (SMSF).
Without getting into the legalities of it, an SMSF is a legal structure where you take on the management and administration responsibilities of your superannuation money yourself. Once you set up an SMSF, there are a number of responsibilities which need to be taken care of. You can be as involved as you like with these responsibilities, or outsource where you think it is appropriate. These responsibilities are as follows:
1. Trustee - The trustee is the legal owner of the assets of the fund. Basically it is the trustee who takes legal responsibility for the fund. If anything goes wrong, it is the trustee who gets the blame.
2. Administration - The administrator looks after all the book keeping and accounting responsibilities. They will prepare and lodge the annual tax returns and documents and ensure all the accounts balance at the end of each financial year.
c) Audit. Each year your superannuation fund should be audited to ensure it complies with the superannuation regulations. A successful audit will ensure you maintain your "complying" superannuation fund status and can continue to enjoy superannuation tax concessions.
d) Investing the money. Superannuation is retirements savings. Someone needs to make all the investment decisions within the superannuation regulations, in a way which maximises the future retirement benefits of its members.
In my situation, all I wanted was control over the investments. I wanted to manage where my money was invested and how much was invested. That way I always knew how much I had in my accounts (as opposed to waiting for the big surprise when my annual statement arrived) and I could feel comfortable knowing that my returns were well earned. They were my responsibility, so in the bad years when my investments fell, at least I wouldn't get frustrated that I had no control. It also afforded me the luxury of managing my superannuation investment as part of my estate rather than as a separate entity. This meant my entire portfolio was significantly more balanced, which is crucial for long term financial success.
I find all the other responsibilities to be very time consuming so I've outsourced them. This leaves me more time to analyse my investments properly and make better investment decisions.
About the Author:
Gnifrus Urquart appreciates controlling his retirement savings, as well as the freedom outsourcing his SMSF Administration affords him.
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