With the growing popularity of SMSFs, this article looks in the other direction and explores the reasons why establishing a SMSF may not be the best idea.
Since the Australian Government introduced compulsory employer contributions to people's superannuation funds in 1992, Australia's funds invested in super have grown to $3 trillion. In this time, self-managed super funds (SMSFs) have grown in popularity too. There are currently just over 1 million members with $747 billion in SMSFs across Australia.
SMSFs can have between one and four members. While not yet legislated, the government has proposed allowing up to six members in an SMSF. Most SMSFs in Australia have two members (70%), with most other SMSFs having a single member (23%). According to the ATO, the average value of assets in people's SMSFs is $320,000. The general recommendation is to have a minimum balance of $200,000 in your SMSF. While it can be tempting to see the potential of being in complete control over your super balance, it may not always be a good idea to set up an SMSF.
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