Golden Rules For Setting Up an SMSF

You should start thinking about your 'golden age' as soon as you start working and generating money. Luckily, the Australian financial system is organized in a manner that allows you to take matters in your own hands and also, supports specialists that have the best skills for it, to handle it all for you. Bottom line, there's an entire industry committed to those years after retirement day, and the best thing is that your lifestyle after your working age doesn't depend entirely on the state and what follows you under the law. It means that you can get a luxurious 'golden age' life very easy. All you need to do is consider setting up an SMSF, or visit an SMSF specialist advisor, if you don't feel like you have the skills to do it all on your own.

No matter which way you choose to go, you must be clear on the goal of the SMSF; it's a fund that needs to be managed in a way so it generates money. If it does, you'll have high gains, but if it doesn't you'll end up with expenses and no luxurious retirement life. So, to prevent this from happening, the ASIC, or the Australian Securities and Investments Commission, set up some golden rules to be followed so managing an SMSF either as a DIY project or run by an SMSF specialist advisor , is as easy and organized as possible:

1. Ideally, your SMSF specialist advisor should explain to you that the best amount to start your fund with is $200 000. If the ammount is significantly less than this, the ASIC will visit you and do a thorough inspenction on everything explaining you the costs and risks of running a fund with assets below this amount.

2. If you hired an SMSF specialist advisor, he/she should do continuous assessment of whether the fund is suitable for you, or changes need to be made.

3. You as an investor in the SMSF, must know that in case of theft or fraud, you have no right to any statutory compensation.

4. Certain dispute resolution mechanisms will not be accessible to clients.

5. The governance structure of a fund is very important and thus, must be carefully considered by advisors.

6. The investment strategy is the core of the fund; no strategy – no gains. So, as an investor, tyou must have a very clear and strong investment strategy. And the SMSF specialist advisor needs to make sure of that, meaning he should revise your strategy and give his/hers expert opinion on the matter as to whether or not the strategy is good.

7. All SMSF investors need to be very clear on the costs and ways a fund operates; they need to know exactly how much it costs to set up, operate and wind up and SMSF before they decide to do it.