As much as an SMSF may look attractive as an option for investing in your golden era, it isn’t without risks. Just like any other investment made, the SMSF also comes with some unpleasant situations attached. That being said, you need to get fully familiarized with the entire set of information in order to avoid certain situations and protect your investment.
Think you already know everything? Did you know that in case a fraud or a theft happens in your fund, you won’t have an access to a compensation scheme? All gone with the wind, right? Here’s a short prelude to the most important things you need to know before entering the SMSF deal.
First and most important: do you have the money?
It’s not just the basic investment you need to do in the form of contributions. As a fund member and trustee, you also need to pay for the cost of investing, accounting and auditing, which may be a lot higher than you think. It’s nothing to be ashamed of or turned off by the idea, but it’s good to talk to a professional SMSF settler before you rush your money into something that’s not as simple as it looks.
Are you up for the task or you’ll need professional help?
As you probably know by now, you can run your own fund – there aren’t any specific requirements. However, you do need to be prepared for running such a fund. Do you have the knowledge for it? Financial and legal matters require a significant knowledge in some facts and very updated information on various topics and spheres which, if it’s not your professional obligations, may be easily skipped because they’re quite boring. Also, matters like auditing and preparing your annual financial reports aren’t just a simple filling in numbers. If you’re not backed up with this kind of knowledge, have in mind that you’ll need professional help, which will cost, but not as much as the loss you’d suffer by irresponsibility or not knowing.
A backup plan for potential turns in the determined flow of events?
If your relationship with some of your trustees changes, you need to know how will you react in order to protect the fund’s investments. For instance, if a trustee dies, becomes ill, or simply doesn’t want to be part of the fund anymore due to quarells, broken relationships and similar, do you have a backup plan? Having a professional help by your side will take care of these things easily as they have a well developed scheme for such cases.
As you can see, small details may cost you a fortune. Even though you may think that you can do it on your own, in this matter, a small negligence may cost you big money. So, ensure your peace of mind by considering a SMSF professional help.