How much money do I need for an SMSF?

Like any investment, SMSFs aren’t for everybody.  However where they are suitable the advantages may be considerable.

New research has been released to provide deeper insights into the costs of running an SMSF – and it shows SMSFs are cheaper to run than many people may think!

The research shows potential SMSF trustees estimates of fees for various SMSF balances compared with retail and industry superannuation funds (also known as APRA regulated funds).

The costs include establishment, accounting costs and some investment fees. The comparisons do not include direct investment fees as these are levied on the investment regardless of if it is in an SMSF or an APRA fund.

What are the results?

SMSFs with under $100,000 are more expensive in comparison to APRA funds

This does not mean you cannot have an SMSF!  While it may be more expensive, an SMSF allows for more freedom of investment options than an APRA fund, potentially offsetting the higher costs.

SMSFs worth $100,000 to $150,000 cost about the same as an APRA regulated fund

SMSFs of this size can be competitive provided you choose a low cost administrator (such as ourselves).

SMSFs worth $200,000 to $500,000s become more cost effective than APRA regulated funds.

A balance of $250,000 is when the savings really start to show.

SMSFs worth $500,000 or more are usually the cheapest option.

For accumulation funds, the fees for all complexities are lower than the lowest fees for APRA funds.

The research shows that simple SMSFs can begin to become cost-effective at $100,000.  For most funds, $200,000 is the turning point where an SMSF becomes cheaper than an APRA fund.

 

What about SMSFs with more than one member?

Based solely on fees, an SMSF becomes more beneficial as the total balance increases.  This is most easily achieved when multiple members roll each their superannuation accounts into the one SMSF.  We have included a table below to demonstrate.

Combined Balance Our Estimated Annual Fees – ex GST

(2 members)

APRA regulated fund Low fees

(2 members)

$50,000 $1,200 $503
$100,000 $1,200 $863
$150,000 $1,200 $1,216
$200,000 $1,200 $1,566
$250,000 $1,200 $1,942
$300,000 $1,200 $2,301
$400,000 $1,200 $3,013
$500,000 $1,200 $3,725

Please note, the APRA figures are based on average and may be different to the fees you are currently paying.

But it’s more than cost

Like with any financial investment, you must look at more than just costs. You should also consider your retirement goals and more importantly if you have the desire, time and expertise to take on the role of an SMSF trustee.

An SMSF will allow for greater flexibility in investments, but does not have as many fraud or loss prevention methods as an APRA fund.

How can we help?

If you are unsure if an SMSF is right for you, or would just like some more information.  Please do not hesitate to contact us.