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Saturday, December 5, 2009

DIY Superannuation - How Much Control Do You Want?

By Gnifrus Urquart

The superannuation system is great for all of us. Our employer puts money away for our retirement, money which we never really see anyway so it does not impact our lifestyles. Then, when we retire, we have a massive pool of saved funds which we can enjoy.

One of the pitfalls of superannuation for me though is the way you lose control of your money. It is your money, yet often someone (such as your employer and usually due to your own inaction) decides where your money is invested. For this reason, I set up my own Self Managed Superannuation Fund (SMSF).

Without making this article too complex, all an SMSF is, is a structure which enables you to manage your own superannuation money. There are a number of responsibilities which come with running your own super fund, you can manage these yourself or outsource them as you see fit. Most of these responsibilities follow:

1. Your Trustee Responsibilities. Someone needs to legally own the assets of the fund. This is the trustee. The trustee is also responsible for the running of the fund, so if anything goes wrong, it is the trustee who is legally liable.

Secondly, there is the administration and accounting responsibilities. This is a time intensive role, keeping the books up to date and preparing the annual accounts, lodging tax returns and preparing reports for members.

3. Audit - The auditor looks over all the accounts prepared by the administrator to ensure they comply with the existing superannuation and tax law. A successful audit will mean you maintain your status as a complying superannuation fund, so you can continue to receive the superannuation tax benefits.

d) Investing the money. Superannuation is retirements savings. Someone needs to make all the investment decisions within the superannuation regulations, in a way which maximises the future retirement benefits of its members.

Personally, I was just interested in managing my investments. All the rest was outsourced. I just wanted to be able to ensure the investment decisions I made were mine so I could feel responsible for any losses or gains that I made. There is nothing worse than when your retirement investments decrease over a year and you have no control whatsoever in the decisions made. I wanted to avoid this. Also, getting control of this meant that I could make investment decisions giving my whole portfolio consideration and not treat my retirement investment as if it were an island, completely separate of other investments I have. It is all part of my estate after all.

Time is always an issue though, which is why I outsourced all the other duties. Getting rid of all those responsibilities left me with much more time to research and make appropriate investment decisions. - 23208

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