I'm only 24 but after doing some reading on here lately I've been considering starting up my own SMSF. Just wondering what more experienced people out there think. Would it be worth it since I'm not likely to be able to retire for another 50 years? That's alot of time between now and then for the government to change the rules and whatnot, and possibly even take everything that I own within the SMSF so not sure on what I should do. Any advice/opinions would be most welcome.
The alternative is to leave it in an industry super fund and watch the little money thats in it get pilfered away on fees each year and lose all value because of poor money management on their part.
I wish I had the foresight at 24 to even think about my Superannuation... I'm 38 and have only recently started my own SMSF. Start your own fund as soon as you can, take control of your financial future (did I just paraphrase nonrecourse? Great learning experience that will serve you well for years to come, IMHO.
Just in the process of setting one up myself. I'm hoping the price of silver stays 'favorable' while I wait for everything to get sent back to me so I can get my old retail fund to roll over the fiat into my trust account asap, I'm told it can take 1 - 2 months from initial application to getting this done. The biggest question I had before applying was the annual audit cost ($699) and the ATO levy ($180) but then I looked back over the last 3 years of my retail funds performance and how much money they were losing across all their investment 'strategies' packages. The return on their highest performer is still below inflation, so in reality they are losing me money and charging me fees for the privilege. I went with 'e*superfund' as they waive the initial set up fee and the first financial years running fee. also they are able to run it on the cheap by doing most of the auditing processes electronically. My wife and I are going to both contribute to this SMSF so all it will cost us to run each year is $440 each as opposed to the average $1000 per year my retail fund has been losing me in both poor investments and fees. I can't comment yet on how much money I might lose, but if I can position it all in silver now that the price is testing $26 and looks to go even cheaper over the course of the next 2 months, I can't see how I could do no worse than my retail fund has.
I am in the same boat as you, slowly going through the steps. One thing to be careful is if you go with e-superfund. is the 700ish yearly fee. for me that is quite a large ammount of moeny for someone young and without 100000's of dollers. Hypothetically 700 a year is a 3.5% return in cash every year to break even and it must be in cash so they can have their fee's.
I think i'd go with a similar strategy to you emanance - invest most/all most likely into silver and gold. Probably in the form of unallocated and then turn that into physical when the price goes above the cost of the bullion + the fee for having it changed to physical (which is only 2 dollars an ounce i think). I doubt id be buying large quantities of the stuff as theres barely any cash in my super atm but things could change i suppose and id thus review my options. Also considering doing pre-tax contributions to lower my overall taxable income though not sure yet. But still, all of these options seem like a good way to build my small stack and hopefully set my on my way to building my "financial pillars" as nonrecourse mentions sometimes. Just a few quick questions for anybody who knows: -are you able to contribute anything other than cash to your super ie could i put some of my physical into my super fund or would i have to sell it then use that cash to put into my super and thus rebuy it again? - what about with houses (for way way way ahead in the future)? Thanks again for the replies, any info/opinions is appreciated. edit also what about doing the opposite: selling yourself assets from your super? im assuming thatd be illegal due to no reciepts and whatnot.
Yep - info here about "in specie contributions" http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00251857.htm&page=29#P692_42605 As in can your SMSF buy houses/property? Yep - probably better to get set up as a Corporate trustee rather than individual trustees from the start if you are heading down this path. Fund structure info here: http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00251857.htm&page=12#P305_18554 Definitely can't do this - all transactions must be at 'arms length' - more info about restrictions here: http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00251857.htm&page=23#P564_34117
@registered nutcase, the $699 with e*superfund is an annual fee. Also don't forget the $180 for the ATO annual levy fee $879 per year. (see: http://esuperfund.com.au/Libraries/WebsitePDF/2_Fees.sflb.ashx) @Fykus, It sounds like you know more about the co contributions than me, something I am wanting to look into though. I'm also thinking of going unallocated storage as well, unless someone can show me a better safer way to keep it secure with out upsetting the ATO. Something you might be interested in if you are going to be investing into gold is that my bullion dealer's storage account isn't 'unallocated'. Instead gold bought from them can be physically held in your name as long as you need them to. Also at financial years end they will send you the statement necessary for the SMSF annual audit (see: https://www.ainsliebullion.com.au/MoreServices/StorageAccounts.aspx) As far as your question about contributing your physical, I can't remember where I read it but I think this can't be done, unless like you said you sell and then re purchase (anyone else know?). If I'm wrong and you can do this I imagine you would then have to store it in a secure location perhaps even with insurance. (see: http://esuperfund.com.au/Libraries/WebsitePDF/5_7_Trade_-_Metals.sflb.ashx) As for Houses, see this link: http://esuperfund.com.au/Libraries/WebsitePDF/7_Property.sflb.ashx Generally speaking I found the e*superfund 'Learning' modules a great source of information. (see: http://esuperfund.com.au/education/LearningModules/PDFModules.aspx)
From what I gather (from discussions in the Super Stashers meetings) whether or not to go with insurance is a choice the trustees make, as long as they minute the decision not to have insurance along with a reason why they made that decision. You can also chose not to disclose where the precious metals are held, for security reasons. Just minute every decision you make in regards to your fund. It makes sense to insure it and keep it in a safe but it is an extra expense and you might decide not to incur that cost. Edit to add, none of us are experts when it comes to SMSF, and I may have misheard the advice so double check before you make any decisions based on my rambling. Our come along to the meeting and ask in person.
My understanding is that insurance is required (within 7 days of purchase) for any collectables included in your SMSF - ie coins, ("Coins and bank notes are collectables if their value exceeds their face value") but probably not bullion bars. You would also need to take care about where your store any such coins... ("Subregulation 13.18AA(3) specifies that each trustee of an SMSF commits an offence if the fund stores a section 62A item in the private residence of a related party.") "This limits any personal enjoyment that a related party can gain from an investment in a section 62A asset." - personal enjoyment must be kept to a strict minimum at all times!... This bit about coins being classed as collectables sometimes develops in to a "point of discussion" so I would recommend reading the ammendments to the SIS Act here http://www.comlaw.gov.au/Details/F2011L01360/Explanatory Statement/Text and making up your own mind.
If there was ever a thread that supported paying for the advice of a CPA or CA then I think maybe this is the one. The old saying " you get what you pay for" Good to see the eagerness to get the SMSF set up however the Trustees have major responsibilities that if stuffed up will cost big time. Be very careful you know what you are getting into. A movement into a SMSF to get solely into PM is totally flawed IMO and will end in tears.
Thanks... Worth staying away from collectibles and sticking with bullion for sure. Personal enjoyment, something like less than 5% of the total of the superfund. If I want to buy some art with my superfund I can hang it on my wall as long as he painting is less than 5% of the total of the fund and I pay the going rate to hire the artwork. All-in-all it probably isn't worth getting collectibles in the SMSF, save that for your own money and you can realise the profits without the government interfering at every step.
Agree with getting financial advice from a professional but the reason I am moving into a SMSF is because the professionals in my industry super lost my money. Also many professionals do not understand the fascination with silver and I would be very surprised to know of any recommending it. All in all, asking questions here is a good start as it could set you along the right path and you can at least learn from other people's mistakes. Just because you pay for advice doesn't mean it is going to be any good, too many financial advisers are lazy and prejudiced towards particular ways of doing things. My last one did us no favours as he already decided what package was best for us before he even met us and still charged something like $3000 all up for his services.
Probably the package that paid him the highest commission. I think if you are thinking long term you couldn't go wrong with silver or gold for that matter. Look at how both have performed over a 30 year period despite both being subjected to massive market manipulation. My biggest concern is over the government raiding any big windfalls with new taxes on bullion profits. However in theory they could only tax it if there is a 'taxable event' i.e. you sell it and make a profit.
Is it easy to add extra people to an smsf, like if i got married and had kids some time in the future for example? Also if you were to get life insurance could you use that as a deduction in an smsf since most normal super funds offer it as part of them?
Only to a maximum of 4 members though. Yes insurance is a very good idea. One of the things I was reading is loss of earnings as well. You can split between super fund and personal. ie: SMSF pays up to 2 years out of work insurance You then have a personal insurance fund which kicks in if you have been out of work for 2 years. So because the super fund is insuring only for 2 years it is kept pretty low. Your personal premium should be very low as you are not entitled to it until 2 years of being out of work/injury which can then continue for 20-40 years whatever ? You also need life insurance as well.
Just another question (sorry for asking so many): -If I were to get married and then divorced, lets say that my partner wasnt part of my smsf, are they entitled to take any of it in the event of divorce? What if they were part of my smsf? Would you need to dissolute the smsf and split it 50-50 and remake your own one again or? Also say if i were to be sued by someone, they wouldnt be able to touch my smsf right? (i assume they definately couldnt if i had a corporate trustee) thanks in advance
Sorry can't help. After reading the other thread, it is still very confusing as to which coins are classified as bullion and non-collectables, and thus ok as part of a SMSF. Are sovereigns and krugerrands acceptable or not? They do not have a spot value higher than a face value, but are only 92% pure not 99%. Is a silver kook or a gold lunar classified as a collectable? The spot value is more than the nominal face value. Yet they are 99.9% pure. I think the only way one can be 100% safe is to only buy 99.9% coins without a face value.
