A Beginner's Guide to Self-Managed Funds


If you're looking to invest your money but don't want to rely on a broker to manage your funds, then a self-managed fund could be the right choice for you. Self-managed funds, also known as self-managed super funds (SMSFs), allow individuals to have greater control over their investments and retirement savings. However, before you dive into self-management, it's important to understand how these funds work and the responsibilities involved. In this beginner's guide, a closer examination of self-managed funds will be conducted, including their benefits, risks, and key considerations prior to setting one up.

What Is a Self-Managed Fund

A self-managed fund is exactly what it sounds like. It's a retirement fund that is managed by you, the investor. Instead of relying on a financial advisor or broker to manage your investments and retirement savings, you have complete control over the investment strategy and the types of assets you want to invest in. Your self-managed fund will be set up as a trust, with you as the trustee. 

Benefits of a Self-Managed Fund

One of the main benefits of a self-managed fund is the level of control you have over your investments. With a self-managed fund, you can invest in a wider range of assets, including commercial property, direct shares, and collectibles. This opens up more potential for earning higher returns than you might with traditional super funds. You also have the ability to tailor your investment strategy to meet your retirement goals and personal preferences. Self-managed funds may also be more cost-effective in the long run, as you'll avoid many of the fees and commissions typically charged by financial advisors and investment managers.

Risks of a Self-Managed Fund

While self-managing investments offer potential benefits, it also entails risks and responsibilities. With a self-managed fund, you're fully accountable for investment decisions, assessing risk, and monitoring asset performance. This requires dedicating time and effort to effective management. Additionally, legal and financial obligations include record keeping, tax returns, and compliance with regulations. If these responsibilities aren't suitable, a self-managed fund may not be the right choice for you.

Setting Up a Self-Managed Fund

Prior to establishing a self-managed fund, it is crucial to comprehend the legal and financial responsibilities associated with it. You'll also need to appoint a trustee or trustee and ensure that your fund has an appropriate investment strategy and risk management plan in place. Once your self-managed fund is set up, you'll need to manage your investments carefully and regularly review the performance of your assets.

Self-managed funds can be a great way to take control of your investments and potentially earn higher returns than you would with traditional super funds. However, they also require a significant amount of time, effort, and responsibility on the part of the investor. Before setting up a self-managed fund, it's important to thoroughly research the potential benefits and risks, ensure that you're comfortable taking on the responsibility, and seek advice from a financial professional.

For more information on self-managed super funds, contact a professional near you.


18 October 2023

Family Firm: How Accountants Help You Prosper

Good day. I’m Linda and I run two family businesses — building contractor and aged care staff agency. It is quite a feat to juggle schedules and keep track of finances. I have become quite an expert with business management software. I have also learnt the vital importance of having good accountants to give advice and keep bookwork up-to-date. Prior to starting our family businesses, I honestly thought accountants existed to organise tax returns. I now understand that their jobs are much more complex and they can help your business prosper. I started this blog to highlight the numerous ways I’ve found that accountants can contribute to financial success. Please browse through the posts and I hope you find something useful within.