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Setting up a new SMSF

Setting up a Self Managed Super Fund, which can be highly effective and can cater for your individual needs if appropriate, is a complex process.

Set up incorrectly it can lead to your Self Managed Super Fund investment returns being diminished by thousands in unnecessary taxes and penalties. It could also limit your ability to borrow funds in your Super Fund, or to pass money down to future generations as you had intended.

A holistic SMSF Advisor can help you organise all the necessary documentation to prepare the fund ready to accept contributions and investments, and arrange for a trust deed to be issued from a competent legal firm that allows for members in either pension or accumulation phase, or a mixture of both.

Upon application, a new Self Managed Super Fund will need:

Your SMSF Advisor should also help you:

  • To understand your obligations and responsibilities
  • Arrange your super trust deed to maximise advanced tax, investment and estate planning opportunities
  • Ensure your Fund is set up to allow you to borrow to buy investment properties in your Super Fund, if appropriate and desired
  • Determine the right number of members in your Super Fund
  • Addressing what kind of trustee is appropriate for your circumstances (individual or corporate), and then setting up this trustee for you
  • Handle all transfers, rollovers, relevant binding forms, ASIC and ATO application forms and trustee declarations
  • Notify employers or payroll administrators and organise member life and income insurance
  • Evaluate your needs, prepare a Statement of Advice and design your investment strategy.

Asset Classes used to Diversify an Investment Portfolio

Australian Self Managed Super Funds can invest and diversify across a combination of the following investments:

  • Australian and Internationals Shares (listed and unlisted)
  • Residential or Commercial Property
  • Cash and Term Deposits
  • Fixed Income Products
  • Physical Commodities
  • Property
  • Collectables

By spreading your SMSF’s investments across different asset classes with a personally tailored diversified investment strategy you can control your investments to help you achieve your Funds’ financial goals and objectives, minimise the risks to the Trustee and Members of the Fund, maximise the income earnings of the Fund, preserve and grow your capital nest egg in the Fund.

Wondering if a SMSF suits your financial goals?

Baggetta & Co would like to offer you a FREE no-obligation consultation to help you decide if a SMSF is right for you.

Important SMSF Investment Pillars:

At Baggetta & Co we like to call these our 3 pillars of effective wealth management in a Self Managed Super Fund.

  • Build Wealth through Capital Growth

    A Capital Growth Strategy in your SMSF is important to ensure that the market value of your investments inside your Fund continue to increase in value over the long term so your nest egg does not diminish nor become part of trying to supplement an income in retirement.

    Retirees are living longer in retirement than our parents and grandparents, and an overly conservative approach may not fund decades in retirement.

    Growth Assets in your SMSF usually provide a higher return, and although they experience more volatility, they are important for those seeking long-term investments or wanting to leave an inheritance for their loved ones and future generations.

  • Invest to Earn Regular Income

    In your retirement, you will be looking to fund your retirement with a steady cash flow from income generating assets that will provide you with regular payments to fund your lifestyle expenses.

    Income generating Assets are considered to be cash, term deposits, hybrids and fixed interest; and in some cases shares and property.  Each come with their own potential benefits and risks.  It is important that your Income Generating Strategy is appropriate for your goals and personal situation.

  • Manage Risk to Preserve your Capital

    Diversification is one of the most important Risk Strategies to preserve your Capital so your hard earned nest egg is safe and protected.   A diversified investment portfolio spreads your SMSF’s risk so it can continue to meet its’ goals and objectives even when one asset class underperforms.

    However, managing risk in your SMSF is not just about ensuring a diversified portfolio.

    All Trustees of a SMSF must also ensure that their SMSF is not underinsured.  Insurance cover, such as Total and Permanent Disability (TPD) and Life insurances, for Members of the fund may be required to ensure the financial future of SMSF members and their families are protected upon the death or permanent disability of a Member rather than be forced to sell Assets in the Fund, especially in unfavourable economic times.

    Liquidity risk must also be considered by Trustees to ensure that cash is at the ready when needed.  SMSFs that are cash poor and asset rich are particularly vulnerable.

    Also consider ‘sequencing risk’.  This occurs when there is both market volatility and cash withdrawals from an investment portfolio.  Luck has a hand in sequencing risk and does not only affect retirees.  It can also affect pre-retirees by forcing them to defer their retirement if the value of their nest egg plunges in a volatile market.

If you are thinking about setting up a SMSF, and want to know if it is appropriate for you and your circumstances, we can assist with a free, no obligation consultation. 

Free Consultation?

For more information about the services we provide, or to find out if you are eligible for a free no-obligation consultation contact us today.

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