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SMSF Firm of the Year

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I have been using the services of Accumulus and have long term relationship with the team. In all dealings, they are most professional and helpful. From your first contact with the team at reception they are always friendly and willing to accommodate all your requests. From the smallest of questions to involved discussions they will provide you with up to date and informative results. They respond to all requests in a timely manner, and ensure that you understand what has been provided. I would be happy to recommend their services and staff.

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The term SMSFs stands for Self Managed Super Funds. An SMSF is essentially a pension fund that functions like a trust with the exception of the fact that the members of an SMSF trust are also the fund’s trustees, thus indicating the ‘self managed’ bit in the name. It is established to help its members accomplish higher retirement savings and has thus become a popular tool for retirement fund managers around the world. However, to understand exactly what an SMSF is and how it operates, one needs to study the history of the idea, especially in the Australian context where SMSFs have become one of the leading modes of superannuation, accounting for almost A$600 billion share in the super assets portfolio of the market.

While the history that has led to the current state of SMSFs is too long, the legislative power of the superannuation fund in Australia begins in the summer of 1999 when the Superannuation Legislation Amendment Act (#3) came into effect for the national budget of the fiscal year 1998-99. The Act categorised the legal instruments for superannuation into two main categories: Small APRA funds and SMSFs. Over time, SMSFs have become one of the largest segments of the country’s superannuation assets market.

The Act also presented superannuation funds as a means for the public to get tax exemptions, which also played a key role in making SMSFs such a sought after investment feature for Australians. The funds provide a great opportunity for trust members who invest their own money in it and are motivated to find the most profitable investment opportunities for their money. Being the managers of their own money, the trustees work together to find viable investment avenues and put their money in opportunities that are sure to provide long-term profits when the members of the fund retire.

Self Managed Super Fund

However, a self managed super fund can become risky if the investments isn’t carefully executed. While there are usually no limits to the number of members in an SMSF, the trustees, who are also the managers of the fund, sometimes seek professional advisory services to find the best possible investment opportunities for the fund’s money. The reason they need to carefully go through their options before investing the money is quite obvious: the world of finance is complex and every day brings a new investment opportunity with its inventors and designers promising endless profits to their investors. If the trustees of a self managed super fund have a few financial experts in the pool, they find it prudent to authorise these members educated in the ins and outs of investments to build the fund’s investment portfolio.

Of course, such fund managers would find the fund the best possible opportunities because they have their own skin in the game, but many funds do not have members with such expertise. In such cases, trustees of SMSFs, especially in case of large funds with thousands of members, seek professional services to manage their investments. Over the years, superannuation investors have come to realise that they have to ensure their investment portfolios stay balanced with a major portion invested in fixed long-term plans where they can expect a substantial profit by the time they retire in many years. With the rest of the money at hand, most SMSF trustees seek short-term profitable opportunities.

Incidentally, high-return short-term opportunities often come with high risk and it is wise to invest only a portion of a fund’s wealth into such avenues. This allows the fund to nicely balance risk and profits, ensuring the members get the most out of their investments without taking unnecessary risks or missing opportunities where the risk was worth it.

Melbourne's Leading SMSF Setup Experts

When it comes to the problem of going for an SMSF setup, it is prudent to take help from professionals. Whether you acquire the services of your existing accountant or hire an experienced funds portfolio manager, giving this responsibility to somebody with the acumen, education, and training to manage funds is the smart way to go. Interestingly, the process of establishing an SMSF does not include many complex problems. In short, you can set up your own SMSF as well, though this path should only be taken if one of the leading trustees in the fund has a strong background in investments.

The process of establishing an SMSF consists of five key steps in theory. Understanding these steps will help you become a better trust manager for your SMSF even if the job of building the fund’s portfolio does not fall in your lap. Following is a brief description of these steps in the process:

  • Step #1: You have to begin with choosing your trustee structure. You must remember here that every member of the trust has to be a trustee as well. So, choose wisely.
  • Step #2: Once you know whether you want an individual trustee structure or a corporate one, you have to work on your paperwork accordingly. Without the right paperwork, your SMSF will be at risk of legal action.
  • Step #3: Now that you have a separate bank account for the fund with the right paperwork, you must move the fund’s money from its current manager into the new account.
  • Step #4: Next, you have to pick your investment strategy for the fund. As discussed earlier, finding the right balance is the right way to go here.
  • Step #5: Lastly, execute the strategy and assign particular roles to trustees/members based on their qualifications.

Only in working together can you grow your fund successfully. There is no other way to manage your SMSF smartly.

Let our experienced team help you
set-up and manage your self-managed super fund today

Proudly Serving Melbourne

Accumulus Advisory has been serving Melbourne for many years. Since opening we have been servicing many of Melbourne’s businesses with our accounting services. These services include tax planning, virtual CFO services, business coaching and advising. We have been servicing many businesses across the city with our accounting solutions, from the lawyers in the city to the small businesses down the road. Here at Accumulus Advisory, we have the skills to help you and your Melbourne business reach it’s full potential.