Hi all!! I am considering setting up a SMSF, along with my twin sister. We are 26, and have a desire to control our superannuation investments, given the large employer default super fund's aren't doing well enough. For me, over the last 6 years the return has averaged a measly 2.5% p.a.! We wish to set up one SMSF due to the costs involved with the running of the SMSF. The idea is to acquire silver and gold in the SMSF. As we are 26, we have another 33 years (at least! unless the Government changes rules and regulations) to access super, so it would be worthwhile focussing on capital gains, rather than chasing yields in the short to mid term. As PMs are 0% yielding assets, we will have no income generated in the super fund. We want to roll over our current balances, but let our employers contribute to the industry funds. The reasoning for this is these funds have super cheap death and TPD insurance (I paid $70 last year. I think I may have specified how much I wish to cover - I will need to revisit this). So each month our employers will contribute to our employer default fund; the fund will deduct tax from contributions. Every 6 to 12 months we will roll over these after tax amounts to our SMSF. The only down side is the costs involved in running an SMSF. As I am an accountant myself, I can prepare the financial statements and tax return for the SMSF, and perhaps arrange for a tax agent to have a second review, and arrange for an audit. As I will prepare the accounts, the compliance costs will be kept to a minimum. There will be other expenses as well, such as storage and insurance of PMs (which could be costly, and as the PMs do not return income, as the value increases, I may have to fund the costs by making additional contributions to super). I am just wondering whether it would be looked down upon by the auditor/ATO if all what the profit & loss reports is 'expenses' (I know I will have to also put through unrealised gains relating to the PMs - but say for example if in one year gains aren't much, the loss will erode the member balances. We are after capital gains - just do not want to rely on someone else, who has no vested interest in my well being, to look after my money. Thoughts? thanks all. monalisa
Welcome to SS Monalisa...Big auction here on SS tonight..I'm sure there will be plenty of good advice forthcoming shortly. Regards Errol 43
This is exactly what I do. Perth Mint Depository storage fees are quite reasonable IMHO. No extra contributions necessary - just leave a small cash balance in your account to cover this each year. I don't particularly give a rats ass what the auditor thinks. All he needs to be concerned with is compliance.
Are you sure this is an option with your default superannuation fund?.. They may allow only one consolidation rollover....then close your membership acct. Everytime they pull your money out of equities/cash management accounts (like term deposits etc) it costs them money in brokerage and acct keeping fees. Either way...go hard, you're only 26, you've got plenty of time...'up' your risk tolerance.
Thank you wrcmad Glad to hear you are doing something similar re contributing to the retail/industry fund. Gives me comfort that this can be done practically I will check with them whether they allow it. I think they have a fee associated with rollovers.... I don't think they would want a member closing an account if contributions are coming in. I will find a bit more out. Thanks for raising this point.
Depending on what town you're in, dealers like GoldStackers and Ainsley Bullion have one off charges to store your bullion....Goldstackers even have a way to take advantage of trading changes of the Gold:Silver Ratio.
Don't forget at least some cash in the SMSF to pay for the expenses. Audit, ATO fee, bank fees, safe deposit box, the initial legal costs to set up the Trust Deed (someone on SS recommended Cleardocs and I used that). They're very very very small, yes, but you still need cash flow and don't want to have to liquidate gold at short notice to pay for something unexpected. And to pay the tax on contributions if you don't keep the employer contributions going into the old retail fund. It's a liberating moment when you take control of a SMSF...well done for heading there.
Thank you... I am a little bit nervous about it all.. because it is 'retirement savings' after all! But I know I shouldn't be, as my sister and I have a good control over our finances, and have been investing in real estate for the last few years. I know PMs is a different game altogether - its just the funds we currently have in super (which will be invested for another 33 years) - it makes sense to invest. I think the nervousness is mainly due to the market price movements - but you'd think over a 30 year period even if the prices reduce, overall there would be some capital gain, as PMs are appreciating assets. Will leave some cash in the fund to meet the expenses. Thanks for sharing the website. I think I will go with DBA Lawyers, which is a law firm in Melbourne - as I am an accountant I have had a few dealings with them, and visited their seminars, they are specialised and do well at what they do.
My industry fund allows one free transfer to another Superfund per year and charges $28 for each transfer after that. No need to close the account. My employer will only pay into the industry superfund but it does have cheap life insurance and there is nothing I can do about it short of quitting so I may as well make the best of it. I am not holding physical precious metals, I have unallocated. No need for storage fees or insurance premiums as these are all taken care of by the dealer, I also do not have to pay fabrication costs and as I intend to sell or swap the precious metals rather than take physical posession so I can get more gold for my money. I go through Goldstackers and eSuperfund.
It is important to ensure your interest earned minus your outgoings achieves a greater return than you currently get, hence your opening balance may dictate whether this is practicably feasible or not? You can run an effective mix of 10-30% precious metals (PM'S) and the remainder in a high interest account and still achieve positive growth in your fund, also with a real inflation rate of +7% your PM's will keep pace with inflation, even if the advertised rate is lower. Although I don't disagree with your logic here, I think pooling all your SGC into one account would make the fund far more sustainable unless of course you have a six fiure sum to transfer. I am a user of Unallocated PM's for SMSF therefore no storage costs. Otherwise "if I don't hold it I don't own it" is your philosophy, you could be up for a few hundred to a $1000 per annum depending on how deep you stack is? What is the sole purpose test? The sole purpose test sets the primary and ancillary purposes for which a superannuation fund must be operated, namely to provide benefits to, or in relation to, members after their retirement, on reaching retirement age, or on their death. The test is in section 62 of the Superannuation Industry (Supervision) Act 1993 (SISA). Read more: http://www.cleardocs.com/clearlaw/superannuation/smsf-sole-purpose-test.html#ixzz2DOTXznwD Expecting capital gains from PM's is a rollercoaster ride you may not enjoy, treat your PM's as money, real money that gains no interest and can be valued to zero at the whim of the bankers. However when the "fiat' system dies you will have a position to take up in the next form of currency.
