How Much Money Do You Need to Have a Self-Managed Super Fund?

A Self-Managed Super Fund (SMSF) is a special type of trust allowing you to manage your own superannuation. As with a regular super fund, your employer will still contribute directly to the fund, and you can contribute when you want. However, it differs from a traditional super fund in that you or your company are trustees. As a trustee, you have direct control over the assets you invest your superannuation into. This is why an SMSF is a popular way for individuals to plan for retirement or assist with planning for taxes. 

How Much Money Do I Need?

The minimum balance you need is a complicated issue that experts debate. While the consensus is that you should have at least $500,000 in superannuation, you may be able to have less in some cases. For instance, an SMSF becomes cost-effective at the $250,000 threshold because the costs of starting a fund and running the fund are fixed. 

How Do I Set Up an SMSF?

There are three things you need to set up an SMSF:

1. Enough money in the fund to make the setup and running costs worth your time and money. As stated above, the exact amount you need is debated and depends on many factors, including how much you will be involved in making the financial decisions and what your contribution strategy looks like.
2. Budget for ongoing costs that will eat into your investment. You need to make sure your SMSF generates enough income to cover the ongoing costs and build up the fund. These costs include accounting, tax, audit, legal fees, and financial advice. 
3. Financial advice or financial know-how. You want to make the right financial decisions and create an investment strategy that generates enough profit to fund your retirement. 

A Self-Managed Super Fund is a popular way for Australians to fund their retirement. If you are interested in such a fund or have any questions, the financial experts at Mortage House can help.