August 13, 2025 • 23 mins
Ready to finally take control of your take control of your retirement savings and stop leaving your future in someone else’s hands? Book your free call with our team today to find out more: https://www.bcsmsf.com.au/contact-us/
In this episode of SMSF Insider, host Troy, founder of Blue Chip SMSF Services, delves into the fundamentals of self-managed super funds (SMSFs). He explains what an SMSF is, a private superannuation fund that you control, allowing you to make your own investment decisions without a fund manager's oversight. Troy emphasizes the complexities involved in setting up an SMSF and advises listeners to engage a professional rather than attempting to do it themselves to avoid potential mistakes. He also outlines the investment opportunities available within an SMSF and discusses the typical structure involving up to six members, often consisting of families.
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The information provided in this recording is for coaching and educational purposes only. It should not be considered personal financial advice. Everyone’s situation is different, so before acting on any of the content discussed, please seek independent financial advice tailored to your specific circumstances.
Timestamps:
00:00:00 - 00:00:00: Introduction
00:00:26 - Engaging a Professional for SMSF Setup
00:00:47 - What is an SMSF?
00:01:43 - Who Can Be Involved in an SMSF?
00:02:06 - Investment Options with an SMSF
00:02:50 - Control and Flexibility of SMSFs
00:03:53 - Rules and Regulations for SMSFs
00:04:15 - Why People Choose SMSFs
00:04:48 - Insurance Considerations with SMSFs
00:06:03 - SMSF Setup Process
00:06:46 - Restrictions on Property Investments
00:07:51 - Making Contributions to Your SMSF
00:09:15 - Understanding SMSF Basics
00:09:47 - Minimum Balance Guidelines for SMSFs
00:10:30 - Long-Term Investment Strategy
00:11:01 - Support for Busy Professionals
00:11:21 - Withdrawal Restrictions from SMSFs
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
A self-managed super fund is a private superannuation fund
that you control and you make all the decisions around. With
Bitcoin and cryptocurrencies, you can get exposure into
that space with your SMSF. There's not a lot of banks that are currently or
that's very restrictive with transferring your funds from
any bank account into these crypto exchanges. Can
(00:26):
So just engage a professional. Don't try and do it yourself because it
is a complex structure and you will stuff it up. When you have a self managed superfarm, there's
things you can and can't invest in. You can invest in most things, but
one thing you can't do is... Welcome to SMSF Insider, where
we help busy professionals to gain financial independence using
an SMSF. Hi, I'm Troy, founder of Blue Chip SMSF Services.
(00:48):
Now over the last 20 years, I've helped thousands of Aussies manage the
complexities of self-managed super funds. And in this podcast, I'll
answer your questions, break down the myths so you can take charge of your
financial freedom. Let's get into it. What is an SMSF? So an SMSF
is essentially a private superannuation fund that you
create for yourself. So you
(01:09):
decide where the money is invested and you
don't have a fund manager looking after your
money and investing it as per their
investment strategy, you have your own investment strategy and
you invest the funds yourself in a way that suits
your investment style. So that is an SMSF, what
(01:32):
an SMSF is. It stands for self-managed super fund and it
allows you to manage your own super as opposed to somebody
else managing it for you. Who's involved in a self-managed
super fund? Well, you can have up to six members, but
typically it's a mum and dad or husband and
wife. And as
(01:54):
I said, you can have up to six members, so you can add additional members if
you need to. But typically what we see is a mum and
dad type scenario with most SMSFs. What
can you do with an SMSF? Well, you can invest
in almost anything, so that could range
anything from international shares, Australian
(02:17):
shares, initial public offerings or
IPOs, so that's investing in companies before they list on
the stock exchange. You can have crypto exposure
if you are into digital assets, you can hold bullion,
you can invest in artwork, you can invest in vintage cars,
all obviously with restrictions around some
(02:40):
of these different asset classes, but essentially you
can invest in almost anything as long
as it's done the right way. What makes it different from other super
funds? Well, the main one is control of course. So
you're able to, you have full control
over your retirement savings. You are
(03:02):
investing it where you're investing the funds, where as per
your investment strategy or as per your investment style. So
what makes a difference? The main one is control and
then obviously gives you that
ability to invest in assets that's
more suited to your investment style. Rules you
(03:24):
have to follow, well there are some strict rules. You need to make sure a
tax return is lodged every year and an independent audit
is done every year on your SMSF. So
they do have rules and there are also rules around investing and
there's many other rules that apply to super
funds in general. So it is important to have
(03:46):
advice or have guidance from a specialist in this space.
Don't try and do it yourself. And why do people
like it? Well, the main one, of course, is control and
the ability to invest in assets outside of
a conservative, balanced, or growth portfolio. You
have many different investment options available when
(04:07):
you're investing in an SMSF, or when you have an SMSF, I should say.
So that's the main reason people like it, control and investment options.
It's not for everyone, so not everyone wants to
control or invest or be responsible, I
should say, for their retirement savings. So it
isn't for everyone, but for those who do want control and
(04:31):
do want a little bit more say in how their funds are invested, an SMSF
could be the right option for you. And
finally, a question we do get
asked a lot is what happens with insurances when
you establish an SMSF or a self-managed super fund. So
(04:51):
if you're coming from a retail fund or an industry fund and you have insurances
attached to that, super account,
what happens with those insurances? Well, it is a very good
question, but essentially you need to replace that insurance. If
you want to close the existing fund down, you should replace, speak
to an insurance specialist that
(05:14):
can help you transfer those insurances
and have the ownership or have the policies owned by your
SMSF. That way you can close down the
existing super fund. But
if there are health issues and you can't get
existing insurance, then you may need to keep that existing
(05:37):
super fund open just for insurance purposes. If
you're healthy and you've got no issues with applying
for new coverage, then that's probably
the best thing to do, typically. Otherwise, if
you can't obtain insurance cover for whatever reason,
you may need to keep that existing fund open just for
(05:58):
the sake of insurances. What's the
setup process like with SMSF? Well, we
have a very simple setup process. It's a one-page application form, a
very simple process. It's a no-advice model, so we don't provide advice
with this particular model. It's essentially a
service that we provide for those who know what they want to invest in or
(06:19):
have an advisor helping them. So
the process that we have is very straightforward. It
can be complex though if you don't choose the right person to set
up your SMSF or you're trying to do it yourself, it can be quite messy.
So please make sure if you are setting up a self-managed super fund,
get a professional to do it for you and save yourself a lot of headaches. So,
(06:42):
when you have a self-managed superfarm, there's things you can and can't invest in.
You can invest in most things but one thing you can't do is buy a
property or you have your estimate set by a property from
yourself. So, the property needs to be at arm's
length transaction if it is a residential property. It
needs to be – you cannot own that property and
(07:04):
it has to be an arm's length transaction. There is circumstances
where you can buy the property from yourself and that is only if
the property is commercial, is a commercial or industrial property
or it's not residential property. Then your SMSF can
purchase that property from you. Apart from that, your
SMSF can invest in almost every single asset
(07:26):
class. There are certainly some regulations around
certain asset classes. So do, when you are setting up
the SMSF or you are investing in certain asset classes, make
sure you're talking to an SMSF specialist
who can give you some guidance around what those regulations may
be so that you are doing it in a way that keeps
(07:48):
your fund compliant. But certainly, as
a whole, SMSFs can invest in a whole range of different asset
classes. Just make sure you do it properly and you get
the right guidance. So when you have an SMSF and
you want to make contributions to your SMSF, or your employer wants
to make contributions to your SMSF, or should be, then
(08:09):
they have what's called an electronic service
agreement, which essentially is some ESA details, which
You'll provide to your employer and your employer will use those details
to make contributions on your behalf into your SMSF. You
can then go and make personal contributions on your own behalf to
your SMSF. Just make sure you're talking to your
(08:32):
whoever's helping you out with your SMSF, make sure you're talking to them. There
might be some references that you might need to make when you're contributing to
your SMSF so that when the tax return, the audit's done
at the end of the year, they can allocate who that contribution is
attached to, which member that contribution should be attached to. So
(08:53):
make sure you're talking to your SMSF advisor or
professional so they can help you with those
contributions moving forward from both your employer and
your personal contributions. So what is a self-managed
super fund? A self-managed super fund is a private superannuation
fund that you control and you make all the decisions around.
(09:16):
So instead of your employer making contributions to
a retail fund or an industry fund or some other fund that
someone else controls and makes decisions over, those
contributions now go into your private superannuation fund
that you control and that you make decisions over. So that
is what a self-managed super fund is in a very, very
(09:40):
basic nutshell. So when you're establishing a
self-managed super fund, there isn't technically a
minimum balance to have, but the ATO does
have a guideline of 200,000. And that becomes
more, once you hit that 200,000 mark, that's when
it does become comparable. to a retail or an
(10:01):
industry fund. So there is guidance around this. It is around
$200,000, but each strategy is different and each circumstance
is different. So it's important to get advice when
you are establishing an SMSF to make sure
that your strategy is actually going to work
for you and is best suited to your
(10:22):
outcomes. For example, if you're investing
with an SMSF, you should be thinking long-term. It is a long-term vehicle
for retirement, so you can't access these funds until retirement, but
they are yours and you may as well get them to grow because if
you don't, It's too late to take action once
(10:42):
you're two years from retirement. The time to take action is now
or yesterday typically. So the sooner you get more
in touch with your retirement savings and your super
account in general, the better
outcome is going to be long term. Just quickly guys, if
you're a busy professional fed up with traditional super funds and overwhelmed by
(11:04):
the setup of your SMSF, we can help. Book in a call with my team
using the link in the show notes and let's build your future on
your terms. Now, back to the episode. So with an SMSF,
there are certainly rules and regulations around. the
SMSF space and super in general. One of the big ones
is pulling money out of your super account
(11:26):
before reaching retirement age
or having any sort of reaching
any sort of condition of release. We have seen clients during
economic downturns more specifically when they
do start, we have seen accounts where people start dipping
into their account. That is a massive no-no. The ATO will,
(11:51):
it will get picked up and it will need to be replaced and you will get a
fine if it's not fixed. So a big no-no is don't
be dipping in to your SMSF like it's a little honeypot
because it's not. It's there for retirement. So that's
a big no-no. Don't dip into your SMSF. It's there
for retirement purposes if you are experiencing any sort of
(12:11):
financial hardship. Reach out to an SMSF,
your SMSF specialist or advisor or
professional, and they can certainly maybe point you in
the right direction around getting a resolution. But certainly dipping into
your SMSF savings is not an option. One
of the things that we get asked a lot is, is an SMSF a
(12:32):
complex structure and is it slow and
messy and is it just a massive problem? And the
answer is, if it's set up incorrectly, yes. You
can avoid this by just engaging the right people from day
dot. If you do this, you should
have a very good experience and
(12:53):
the SMSF process should be overall a
good one. But certainly if you're doing it yourself or engaging
someone that's maybe not really a specialist in this space, then
the process might not be one
that you think is a pleasurable one. So
(13:13):
that's a big one. So, when we talk about opportunity cost with establishing an
SMSF, one of them might be setting
it up yourself and creating a big mess and
then losing time setting it up correctly. So,
for example, you might be trying to get into one particular asset class immediately,
(13:34):
you try and do it yourself or you engage someone that doesn't have experience in the space, they
stuff it up and then it's got to be closed down
or fixed and then you've completely missed a
great opportunity, investment opportunity, which obviously
they do come around, but certainly a big
(13:54):
thing is opportunity cost. Make sure if there is a specific asset
class you're trying to jump into, then just engage the
right people from day dot and that way you won't miss that opportunity.
Although the legislation's been around for a while, one
of the big things is people still don't realize that you can borrow
with your SMSF. So, yeah, it's
(14:18):
not a secret because it has been around for a while, but there's still a lot of people that
don't know about it. So that is a
strategy, quite a powerful strategy when you are adding leverage
into your investment portfolio. So, That
is something to consider if obviously seek advice around
this type of strategy but certainly your SMSF can borrow to
(14:40):
buy property. When you have an SMSF and you are borrowing, you
need what's called a bear trust or a custodial trust and
that trust is a trust
that's established and the asset that you're purchasing will
be in the name of that bear trust or custodial trust.
Once that debt is paid off, then that asset can then be transferred into
(15:03):
your SMSF. So it's a little bit more complex. When
you are borrowing, you do have an extra trust involved, which
is called bear trust. And that's not bear as in B-E-A-R with
the big claws. It's bear as in it has nothing, no other assets
inside of it. That is something to consider when you are
borrowing. You do need a bear trust and you
(15:24):
do need a trustee of that trust, which is typically a company. So
make sure if you are using this strategy, you're engaging professionals
that have established these, not only SMCFs, but
also established the bear trust as well. So when you do have
an SMSF or any trust has
to have what's called a trustee and an SMSF can
(15:48):
have two types of trustees. It can have individual trustees which need
to be a minimum of two trustees, individual
trustees or it can have a corporate trustee which
is essentially a company. And so, most
commonly, certainly in our practice, the
(16:08):
corporate trustees are the most common because
you can have one, you can have a single member fund. But when
you've got individual trustees, you do have to have a minimum of
two, and that can become quite complex. If
there is a marriage breakdown or there's a death, then
who else steps in to be that other trustee? And
(16:33):
that other trustee also has to become a member of that fund as well, so it does
become a little bit messy. So when you are establishing an SMSF, make
sure you're getting some guidance around which trustee you
should have. With Bitcoin and cryptocurrencies, obviously they've
exploded in the last sort of five years. So
you can get exposure into that space with your SMSF. You've
(16:56):
got to make sure that your investment strategy allows
for that, so make sure you're updating your investment strategy or make
sure whoever's looking after you in the SMSF space is
updating your investment strategy for you to To make
sure that that is part of your your investment strategy But
certainly it has exploded and there is a lot more inquiry
(17:18):
about this particular asset class And
you just need to be mindful around Around in
this space so in particular There's
not a lot of banks that will allow the transfer. Once you've set up
a bank account, there's not a lot of banks that are currently or that's very
(17:38):
restrictive with transferring your funds from
any bank account into these crypto exchanges. make
sure that you're getting whoever's setting up
your SMSF, if you are going into this space of crypto, then
make sure that the bank you're using, or
make sure you have a bank that allows transfers from
(18:02):
their banking facility to the crypto exchange. Otherwise, you're
going to set up your SMSF and then you're not going to be able to get the money to
the exchange to purchase the asset. So make sure when you're setting
up the SMSF, Make sure whoever's doing that for you,
make sure they're giving you advice or
helping you establish an account with a
bank that allows that transfer from the bank account
(18:26):
to the exchange to purchase the asset. So when you are setting up
an SMSF, you should, or your investment,
your SMSF professional advisor should be
able to help you decide which trustee you
should have, whether that be individual trustees or a
corporate trustee. So things
you'll also need to have read prepared when you are
(18:49):
establishing your SMSF, you'll need your tax file number,
some identification, you'll need maybe
a recent super statement to just
to confirm how much you have in super and your member number
because they'll need all of those details for your rollovers when you're rolling funds
from your existing super fund to your SMSF. So
(19:11):
just make sure you have all of those details ready for
your SMSF provider when you're establishing your SMSF so
that they can set it up efficiently and quickly. If
they are chasing you for that sort of information, obviously it'll slow the process down.
So have your tax file number handy, have your ID ready, have
your super statement ready, and they
(19:33):
should be able to help you with regards to which
trustee you should have, whether that be individual or a corporate trustee. Can
So just engage a professional. We see it time and time again where
people go and try and set up an SMSF by themselves and
(19:54):
they come unstuck halfway through the process. Don't be one of these people. Just
engage an SMSF professional who can set
the fund up for you efficiently and not stuff it up. Typically,
the fees can be paid for once the SMSF is
actually established. You don't need to pay for it up front in
some cases. I know in our case, you don't. So
(20:17):
look for an SMSF provider that can set
the fund up for you and then pay the fee once
it's been established. Don't try and do it yourself because it is
a complex structure and you will stuff it up. When you are establishing an SMSF, it's
like anything, you pay for what you get. So if it's free or
it's cheap, you're probably going to get a very
(20:38):
cheap service or potentially not a service
that may be suited to someone that requires a
bit of hand-holding. So, if you do require a bit of
hand-holding and you want a service that
is a little bit more high-touch, then probably just
pay a little bit extra and have a company do
(20:58):
it for you that's going to step you through and you can call them
and ask questions. You do have a dedicated customer service professional
that can answer your questions and help you through the process. If
you are doing it on the cheap and you are setting it up for free or
online, then my guess is it's probably not
going to have the customer service and you're
(21:19):
not going to have someone there to answer your questions and step you
through that process and hold your hand through that process. So,
as I said, you pay for what you get. If you
are going to set up an SMSF and you do require hand-holding, pay
a little bit extra, have someone do it that knows what they're doing and
can answer the questions and you can call when you
(21:40):
need to and ask the questions that you need to. It is your retirement savings.
Don't stuff it up. Just pay the extra money and get it
done properly and have someone there to hold your
hand through that process. When you are establishing an SMSF, prices do range,
as I mentioned, so it can be anything from free
(22:01):
to, which is, I wouldn't expect much service, but
anything up to, if you've got a corporate trustee,
then it could be up to $4,400. If
you've got a bear trust, it could be all the way up to $6,600 with
a bear trust. So a bear trust is what you need when you've
(22:21):
got some borrowing. So you're buying a property, you need some lending, you need a bear trust. So
prices can range anywhere from the low range being $1,100 or $1,200. or
$2,200 all the way up to $6,600 with a
bear trust. So depending on what you're needing, if it's
just an SMSF with an individual trustee, obviously that's
(22:44):
going to be cheaper. But if you've got a corporate trustee, you need
a company, so that's that. there is a cost in
establishing a company, so typically it's going to be a little bit more, but
that's typically the range, but in that range you
will pay for what you get, so don't expect much service from
(23:06):
a provider that's doing it for nothing. Thanks for tuning in to this episode of
SMSF Insider. If you got value from this, make sure you subscribe so
you never miss the strategies we share to help you take control of your financial
future. Find us on socials at bluechipSMSF or
A self-managed super fund is a private superannuation fund
that you control and you make all the decisions around. With
Bitcoin and cryptocurrencies, you can get exposure into
that space with your SMSF. There's not a lot of banks that are currently or
that's very restrictive with transferring your funds from
any bank account into these crypto exchanges. Can
(00:26):
So just engage a professional. Don't try and do it yourself because it
is a complex structure and you will stuff it up. When you have a self managed superfarm, there's
things you can and can't invest in. You can invest in most things, but
one thing you can't do is... Welcome to SMSF Insider, where
we help busy professionals to gain financial independence using
an SMSF. Hi, I'm Troy, founder of Blue Chip SMSF Services.
(00:48):
Now over the last 20 years, I've helped thousands of Aussies manage the
complexities of self-managed super funds. And in this podcast, I'll
answer your questions, break down the myths so you can take charge of your
financial freedom. Let's get into it. What is an SMSF? So an SMSF
is essentially a private superannuation fund that you
create for yourself. So you
(01:09):
decide where the money is invested and you
don't have a fund manager looking after your
money and investing it as per their
investment strategy, you have your own investment strategy and
you invest the funds yourself in a way that suits
your investment style. So that is an SMSF, what
(01:32):
an SMSF is. It stands for self-managed super fund and it
allows you to manage your own super as opposed to somebody
else managing it for you. Who's involved in a self-managed
super fund? Well, you can have up to six members, but
typically it's a mum and dad or husband and
wife. And as
(01:54):
I said, you can have up to six members, so you can add additional members if
you need to. But typically what we see is a mum and
dad type scenario with most SMSFs. What
can you do with an SMSF? Well, you can invest
in almost anything, so that could range
anything from international shares, Australian
(02:17):
shares, initial public offerings or
IPOs, so that's investing in companies before they list on
the stock exchange. You can have crypto exposure
if you are into digital assets, you can hold bullion,
you can invest in artwork, you can invest in vintage cars,
all obviously with restrictions around some
(02:40):
of these different asset classes, but essentially you
can invest in almost anything as long
as it's done the right way. What makes it different from other super
funds? Well, the main one is control of course. So
you're able to, you have full control
over your retirement savings. You are
(03:02):
investing it where you're investing the funds, where as per
your investment strategy or as per your investment style. So
what makes a difference? The main one is control and
then obviously gives you that
ability to invest in assets that's
more suited to your investment style. Rules you
(03:24):
have to follow, well there are some strict rules. You need to make sure a
tax return is lodged every year and an independent audit
is done every year on your SMSF. So
they do have rules and there are also rules around investing and
there's many other rules that apply to super
funds in general. So it is important to have
(03:46):
advice or have guidance from a specialist in this space.
Don't try and do it yourself. And why do people
like it? Well, the main one, of course, is control and
the ability to invest in assets outside of
a conservative, balanced, or growth portfolio. You
have many different investment options available when
(04:07):
you're investing in an SMSF, or when you have an SMSF, I should say.
So that's the main reason people like it, control and investment options.
It's not for everyone, so not everyone wants to
control or invest or be responsible, I
should say, for their retirement savings. So it
isn't for everyone, but for those who do want control and
(04:31):
do want a little bit more say in how their funds are invested, an SMSF
could be the right option for you. And
finally, a question we do get
asked a lot is what happens with insurances when
you establish an SMSF or a self-managed super fund. So
(04:51):
if you're coming from a retail fund or an industry fund and you have insurances
attached to that, super account,
what happens with those insurances? Well, it is a very good
question, but essentially you need to replace that insurance. If
you want to close the existing fund down, you should replace, speak
to an insurance specialist that
(05:14):
can help you transfer those insurances
and have the ownership or have the policies owned by your
SMSF. That way you can close down the
existing super fund. But
if there are health issues and you can't get
existing insurance, then you may need to keep that existing
(05:37):
super fund open just for insurance purposes. If
you're healthy and you've got no issues with applying
for new coverage, then that's probably
the best thing to do, typically. Otherwise, if
you can't obtain insurance cover for whatever reason,
you may need to keep that existing fund open just for
(05:58):
the sake of insurances. What's the
setup process like with SMSF? Well, we
have a very simple setup process. It's a one-page application form, a
very simple process. It's a no-advice model, so we don't provide advice
with this particular model. It's essentially a
service that we provide for those who know what they want to invest in or
(06:19):
have an advisor helping them. So
the process that we have is very straightforward. It
can be complex though if you don't choose the right person to set
up your SMSF or you're trying to do it yourself, it can be quite messy.
So please make sure if you are setting up a self-managed super fund,
get a professional to do it for you and save yourself a lot of headaches. So,
(06:42):
when you have a self-managed superfarm, there's things you can and can't invest in.
You can invest in most things but one thing you can't do is buy a
property or you have your estimate set by a property from
yourself. So, the property needs to be at arm's
length transaction if it is a residential property. It
needs to be – you cannot own that property and
(07:04):
it has to be an arm's length transaction. There is circumstances
where you can buy the property from yourself and that is only if
the property is commercial, is a commercial or industrial property
or it's not residential property. Then your SMSF can
purchase that property from you. Apart from that, your
SMSF can invest in almost every single asset
(07:26):
class. There are certainly some regulations around
certain asset classes. So do, when you are setting up
the SMSF or you are investing in certain asset classes, make
sure you're talking to an SMSF specialist
who can give you some guidance around what those regulations may
be so that you are doing it in a way that keeps
(07:48):
your fund compliant. But certainly, as
a whole, SMSFs can invest in a whole range of different asset
classes. Just make sure you do it properly and you get
the right guidance. So when you have an SMSF and
you want to make contributions to your SMSF, or your employer wants
to make contributions to your SMSF, or should be, then
(08:09):
they have what's called an electronic service
agreement, which essentially is some ESA details, which
You'll provide to your employer and your employer will use those details
to make contributions on your behalf into your SMSF. You
can then go and make personal contributions on your own behalf to
your SMSF. Just make sure you're talking to your
(08:32):
whoever's helping you out with your SMSF, make sure you're talking to them. There
might be some references that you might need to make when you're contributing to
your SMSF so that when the tax return, the audit's done
at the end of the year, they can allocate who that contribution is
attached to, which member that contribution should be attached to. So
(08:53):
make sure you're talking to your SMSF advisor or
professional so they can help you with those
contributions moving forward from both your employer and
your personal contributions. So what is a self-managed
super fund? A self-managed super fund is a private superannuation
fund that you control and you make all the decisions around.
(09:16):
So instead of your employer making contributions to
a retail fund or an industry fund or some other fund that
someone else controls and makes decisions over, those
contributions now go into your private superannuation fund
that you control and that you make decisions over. So that
is what a self-managed super fund is in a very, very
(09:40):
basic nutshell. So when you're establishing a
self-managed super fund, there isn't technically a
minimum balance to have, but the ATO does
have a guideline of 200,000. And that becomes
more, once you hit that 200,000 mark, that's when
it does become comparable. to a retail or an
(10:01):
industry fund. So there is guidance around this. It is around
$200,000, but each strategy is different and each circumstance
is different. So it's important to get advice when
you are establishing an SMSF to make sure
that your strategy is actually going to work
for you and is best suited to your
(10:22):
outcomes. For example, if you're investing
with an SMSF, you should be thinking long-term. It is a long-term vehicle
for retirement, so you can't access these funds until retirement, but
they are yours and you may as well get them to grow because if
you don't, It's too late to take action once
(10:42):
you're two years from retirement. The time to take action is now
or yesterday typically. So the sooner you get more
in touch with your retirement savings and your super
account in general, the better
outcome is going to be long term. Just quickly guys, if
you're a busy professional fed up with traditional super funds and overwhelmed by
(11:04):
the setup of your SMSF, we can help. Book in a call with my team
using the link in the show notes and let's build your future on
your terms. Now, back to the episode. So with an SMSF,
there are certainly rules and regulations around. the
SMSF space and super in general. One of the big ones
is pulling money out of your super account
(11:26):
before reaching retirement age
or having any sort of reaching
any sort of condition of release. We have seen clients during
economic downturns more specifically when they
do start, we have seen accounts where people start dipping
into their account. That is a massive no-no. The ATO will,
(11:51):
it will get picked up and it will need to be replaced and you will get a
fine if it's not fixed. So a big no-no is don't
be dipping in to your SMSF like it's a little honeypot
because it's not. It's there for retirement. So that's
a big no-no. Don't dip into your SMSF. It's there
for retirement purposes if you are experiencing any sort of
(12:11):
financial hardship. Reach out to an SMSF,
your SMSF specialist or advisor or
professional, and they can certainly maybe point you in
the right direction around getting a resolution. But certainly dipping into
your SMSF savings is not an option. One
of the things that we get asked a lot is, is an SMSF a
(12:32):
complex structure and is it slow and
messy and is it just a massive problem? And the
answer is, if it's set up incorrectly, yes. You
can avoid this by just engaging the right people from day
dot. If you do this, you should
have a very good experience and
(12:53):
the SMSF process should be overall a
good one. But certainly if you're doing it yourself or engaging
someone that's maybe not really a specialist in this space, then
the process might not be one
that you think is a pleasurable one. So
(13:13):
that's a big one. So, when we talk about opportunity cost with establishing an
SMSF, one of them might be setting
it up yourself and creating a big mess and
then losing time setting it up correctly. So,
for example, you might be trying to get into one particular asset class immediately,
(13:34):
you try and do it yourself or you engage someone that doesn't have experience in the space, they
stuff it up and then it's got to be closed down
or fixed and then you've completely missed a
great opportunity, investment opportunity, which obviously
they do come around, but certainly a big
(13:54):
thing is opportunity cost. Make sure if there is a specific asset
class you're trying to jump into, then just engage the
right people from day dot and that way you won't miss that opportunity.
Although the legislation's been around for a while, one
of the big things is people still don't realize that you can borrow
with your SMSF. So, yeah, it's
(14:18):
not a secret because it has been around for a while, but there's still a lot of people that
don't know about it. So that is a
strategy, quite a powerful strategy when you are adding leverage
into your investment portfolio. So, That
is something to consider if obviously seek advice around
this type of strategy but certainly your SMSF can borrow to
(14:40):
buy property. When you have an SMSF and you are borrowing, you
need what's called a bear trust or a custodial trust and
that trust is a trust
that's established and the asset that you're purchasing will
be in the name of that bear trust or custodial trust.
Once that debt is paid off, then that asset can then be transferred into
(15:03):
your SMSF. So it's a little bit more complex. When
you are borrowing, you do have an extra trust involved, which
is called bear trust. And that's not bear as in B-E-A-R with
the big claws. It's bear as in it has nothing, no other assets
inside of it. That is something to consider when you are
borrowing. You do need a bear trust and you
(15:24):
do need a trustee of that trust, which is typically a company. So
make sure if you are using this strategy, you're engaging professionals
that have established these, not only SMCFs, but
also established the bear trust as well. So when you do have
an SMSF or any trust has
to have what's called a trustee and an SMSF can
(15:48):
have two types of trustees. It can have individual trustees which need
to be a minimum of two trustees, individual
trustees or it can have a corporate trustee which
is essentially a company. And so, most
commonly, certainly in our practice, the
(16:08):
corporate trustees are the most common because
you can have one, you can have a single member fund. But when
you've got individual trustees, you do have to have a minimum of
two, and that can become quite complex. If
there is a marriage breakdown or there's a death, then
who else steps in to be that other trustee? And
(16:33):
that other trustee also has to become a member of that fund as well, so it does
become a little bit messy. So when you are establishing an SMSF, make
sure you're getting some guidance around which trustee you
should have. With Bitcoin and cryptocurrencies, obviously they've
exploded in the last sort of five years. So
you can get exposure into that space with your SMSF. You've
(16:56):
got to make sure that your investment strategy allows
for that, so make sure you're updating your investment strategy or make
sure whoever's looking after you in the SMSF space is
updating your investment strategy for you to To make
sure that that is part of your your investment strategy But
certainly it has exploded and there is a lot more inquiry
(17:18):
about this particular asset class And
you just need to be mindful around Around in
this space so in particular There's
not a lot of banks that will allow the transfer. Once you've set up
a bank account, there's not a lot of banks that are currently or that's very
(17:38):
restrictive with transferring your funds from
any bank account into these crypto exchanges. make
sure that you're getting whoever's setting up
your SMSF, if you are going into this space of crypto, then
make sure that the bank you're using, or
make sure you have a bank that allows transfers from
(18:02):
their banking facility to the crypto exchange. Otherwise, you're
going to set up your SMSF and then you're not going to be able to get the money to
the exchange to purchase the asset. So make sure when you're setting
up the SMSF, Make sure whoever's doing that for you,
make sure they're giving you advice or
helping you establish an account with a
bank that allows that transfer from the bank account
(18:26):
to the exchange to purchase the asset. So when you are setting up
an SMSF, you should, or your investment,
your SMSF professional advisor should be
able to help you decide which trustee you
should have, whether that be individual trustees or a
corporate trustee. So things
you'll also need to have read prepared when you are
(18:49):
establishing your SMSF, you'll need your tax file number,
some identification, you'll need maybe
a recent super statement to just
to confirm how much you have in super and your member number
because they'll need all of those details for your rollovers when you're rolling funds
from your existing super fund to your SMSF. So
(19:11):
just make sure you have all of those details ready for
your SMSF provider when you're establishing your SMSF so
that they can set it up efficiently and quickly. If
they are chasing you for that sort of information, obviously it'll slow the process down.
So have your tax file number handy, have your ID ready, have
your super statement ready, and they
(19:33):
should be able to help you with regards to which
trustee you should have, whether that be individual or a corporate trustee. Can
So just engage a professional. We see it time and time again where
people go and try and set up an SMSF by themselves and
(19:54):
they come unstuck halfway through the process. Don't be one of these people. Just
engage an SMSF professional who can set
the fund up for you efficiently and not stuff it up. Typically,
the fees can be paid for once the SMSF is
actually established. You don't need to pay for it up front in
some cases. I know in our case, you don't. So
(20:17):
look for an SMSF provider that can set
the fund up for you and then pay the fee once
it's been established. Don't try and do it yourself because it is
a complex structure and you will stuff it up. When you are establishing an SMSF, it's
like anything, you pay for what you get. So if it's free or
it's cheap, you're probably going to get a very
(20:38):
cheap service or potentially not a service
that may be suited to someone that requires a
bit of hand-holding. So, if you do require a bit of
hand-holding and you want a service that
is a little bit more high-touch, then probably just
pay a little bit extra and have a company do
(20:58):
it for you that's going to step you through and you can call them
and ask questions. You do have a dedicated customer service professional
that can answer your questions and help you through the process. If
you are doing it on the cheap and you are setting it up for free or
online, then my guess is it's probably not
going to have the customer service and you're
(21:19):
not going to have someone there to answer your questions and step you
through that process and hold your hand through that process. So,
as I said, you pay for what you get. If you
are going to set up an SMSF and you do require hand-holding, pay
a little bit extra, have someone do it that knows what they're doing and
can answer the questions and you can call when you
(21:40):
need to and ask the questions that you need to. It is your retirement savings.
Don't stuff it up. Just pay the extra money and get it
done properly and have someone there to hold your
hand through that process. When you are establishing an SMSF, prices do range,
as I mentioned, so it can be anything from free
(22:01):
to, which is, I wouldn't expect much service, but
anything up to, if you've got a corporate trustee,
then it could be up to $4,400. If
you've got a bear trust, it could be all the way up to $6,600 with
a bear trust. So a bear trust is what you need when you've
(22:21):
got some borrowing. So you're buying a property, you need some lending, you need a bear trust. So
prices can range anywhere from the low range being $1,100 or $1,200. or
$2,200 all the way up to $6,600 with a
bear trust. So depending on what you're needing, if it's
just an SMSF with an individual trustee, obviously that's
(22:44):
going to be cheaper. But if you've got a corporate trustee, you need
a company, so that's that. there is a cost in
establishing a company, so typically it's going to be a little bit more, but
that's typically the range, but in that range you
will pay for what you get, so don't expect much service from
(23:06):
a provider that's doing it for nothing. Thanks for tuning in to this episode of
SMSF Insider. If you got value from this, make sure you subscribe so
you never miss the strategies we share to help you take control of your financial
future. Find us on socials at bluechipSMSF or
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