#007 - SMSF Mistakes That Could Cost You Thousands ⚠️💸

In this episode of SMSF Insider, host Troy, founder of Blue Chip SMSF Services, discusses critical mistakes to avoid when establishing a Self-Managed Super Fund (SMSF). He emphasizes the importance of getting involved in the market and not waiting for the perfect timing. Troy explains the significance of choosing the right trustee structure, highlighting the differences between a corporate trustee and individual trustees. He warns listeners about potential issues that can arise from having two individual trustees, such as relationship breakdowns or the death of a trustee. Tune in to learn how to navigate the complexities of SMSFs and take charge of your financial independence.

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Please note: 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

00:01:03 - Choosing the Right Trustee Structure

00:02:09 - Tailoring Your Investment Strategy

00:02:51 - Assets Must Be in SMSF Name

00:03:13 - Rolling Over Existing Super Funds

00:03:45 - Avoiding Cash During Market Downturns

00:04:28 - Monitoring Your Investments

00:04:59 - Getting Professional Help for Setup

00:05:20 - Updating Binding Death Nominations

00:05:53 - Prohibitions on Personal Expenses

00:06:25 - Avoiding Over-Diversification

00:06:45 - The Dangers of Procrastination

Episode Transcript

(00:00):
Those of you who have wanted to set up an SMSF before but haven't
made the step yet, I'm talking to you. This is another big
mistake. It's time in the market, not timing the market. So get
involved, but don't sit on the sidelines because you need
to be involved in the game. You can't be sitting on the bench watching. You can't use
your SMSF for personal expenses. It's a big no-no. If you've

(00:21):
only got a single person fund, you don't
really have a lot of options. You can really only... Another
mistake that you don't want to make 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. Now, over the last 20 years, I've

(00:42):
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.
Hi guys and welcome to this edition of SMSF
Insider where we'll be talking about some costly mistakes
that you can avoid when establishing your SMSF.

(01:04):
So the first one is choosing the wrong trustee
structure. So when you're establishing an SMSF
you need what's called a trustee Now that can be either
a corporate trustee, which is a company, or it can be
two individual trustees or a minimum of two individual trustees.
Now, if you've only got a single

(01:27):
person fund, you don't really have a
lot of options. You can really only have a corporate trustee. However,
if you do choose two individual trustees as
your trustee structure, then
you need to be mindful if that relationship dissolves
later on down the track for whatever reason. or there's

(01:50):
a death between either party, then that
can create some issues and some costs with
your SMSF. So it's important to get the trustee structure correctly
up front. So make sure you speak to somebody
around establishing or helping you with making that
decision. The next one is just copy and

(02:11):
pasting your investment strategy. So with
this, your investment strategy should be tailored exactly
towards your investment, your SMSF, or your self-managed
super fund. So it needs to outline how
your funds are going to be invested is essentially what an

(02:31):
investment strategy does or is. So making
sure that it's suited and tailored to exactly towards
your SMSF and you haven't just copied and pasted it from
somebody else's investment strategy. Another common mistake is
having assets in your own name instead of the name of the SMSF. So
when you're purchasing assets for your SMSF, those

(02:53):
assets need to be in the name of your SMSF. So if you're
purchasing property, or you're purchasing bullion, or
you're purchasing crypto, or you're purchasing shares, or
whatever you're purchasing, make sure that the assets are
in the name of your SMSF and not in your own personal
name. Another common mistake is forgetting to roll over

(03:15):
your super from your existing super funds.
Now, there's been a lot of circumstances where we've set up funds and
clients have forgotten about an old account that was established many
years ago and the money's just sitting there not
doing anything. So keeping a track of all your super
funds, keeping them all together, So that

(03:39):
if you do eventually decide to consolidate into
an SMSF, you know exactly where all your funds are. Another mistake
is going to cash in downturns. So
this could be said for any sort
of investing, really. But with SMSFs,
it's no different. When there is a cash or when there

(04:01):
is a downturn, I should say, you want to make sure that you're not
reverting to cash otherwise, but you'll potentially miss
the upside when the markets do eventually recover. Just quickly guys,
if you're a busy professional fed up with traditional super funds and overwhelmed
by 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

(04:25):
on your terms. Now, back to the episode. Another mistake
that we often see is just with
your investments is just making sure you're keeping track
of them and you're actually checking on
your investments and seeing how they're performing throughout the year instead
of waiting until the end of the financial year. Keep an eye on them throughout the financial

(04:47):
year and that way you're staying abreast of how
your portfolio is tracking in general. Setting your SMSF
up by yourself is another common mistake that
we see. It's often ends in
a bit of a mess and can require, it
can be an expensive, they can be expensive to fix.

(05:07):
So when you are establishing an SMSF,
make sure you're getting the right advice and you're establishing your
fund with someone who has experience in this space. Another
mistake that you probably don't wanna make is not
updating your binding death nomination should your

(05:29):
relationship dissolve with your partner or you're getting
divorced. The last thing you want is your hard-earned retirement
savings go to your ex-spouse. So
make sure that your binding death nomination reflects
where you actually want your proceeds to go when you pass away. Another
mistake is using your SMSF for personal

(05:52):
expenses. It's a big no-no. You
can't use your SMSF for personal expenses and
you certainly can't use it as a piggy bank and
dip into it whenever you please. There are restrictions around
accessing funds and you need to meet what's called a condition of
release. And for those conditions of release, speak

(06:14):
to your advisor or your SMSF professional around
what you need to do to meet a condition of release. Personal
expenses is certainly not one of them. Over-diversification is
another mistake that we often
see where clients are over-diversifying. They've
got too much of a spread and that can sometimes suppress

(06:38):
their returns overall. Finally, last
but not least, is procrastination. So those of
you who have wanted to set up an SMSF before but haven't made
the step yet, I'm talking to you. These
are the guys. This is another big mistake. If
you are thinking about doing it, the markets are moving. They have

(06:59):
been moving for a long time. So yes, they do crash
at some point, but it's time in the market, not timing
the market. So get involved. Speak
to your advisor, speak to someone who can point you in the right direction and
help you through this process. But don't sit on the sidelines because
you want to get involved. If you want the good returns, you need to be involved in

(07:23):
the game. You can't be sitting on the bench watching. So that's it guys.
Thank you for listening. That is episode number,
I'm not sure, but thank you for listening. If you've got any comments,
please make a comment in
the comment section or if there's something you want us to talk about, please
let us know. We'd love to talk

(07:47):
about something that you're interested in. So leave a comment and
thank you for listening. Thanks for tuning in to this episode of SMSF Insider.
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