Industry Super Australia (ISA) has released several warnings regarding SMSFs on their website; one of the most significant being they that are generally more efficient for people with at least half a million dollars in their super.
ISA has advised clients that SMSFs contain hidden traps and has suggested that investors need to set aside two hours per week to manage a fund before starting one. The industry also recommended that members should have a very keen interest and “strong knowledge of the stock market and investments if they are to start an SMSF.”
The warnings come as the number of SMSFs has increased substantially in the last year with figures indicating that in 2012, there were 478,000 SMSFs, with 913, 550 members and a total of $439 billion in assets.
The ISA has said that trustees should question whether they not only have the expertise with shares, trusts and other investment products to make better decisions than the professionals but what will they give up to put aside the two hours or so per week required to manage an SMSF.
Other suggestions and warnings highlighted by the ISA include: being able to ensure they will have the capacity to stay abreast of the frequent changes to SMSF rules and regulations made by the ATO, and the need to purchase additional insurance to replace the cover they may have in their existing fund.