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SMSF via Super Bank Account

Discussion in 'Superannuation, SMSF & Personal Insurance' started by shrek, 13th Aug, 2010.

  1. shrek

    shrek Member

    Joined:
    21st Jun, 2009
    Posts:
    13
    Location:
    Brisbane
    Hi All.

    Been considering a more conservative strategy for our SMSF, which is a super bank account (current interest rates are 5-6%) which is very nice. Considering I have about 190K in super and plan to invest 35-40K per year for the next 20 years this seems like a SAFE and good option.

    I understand I may get a better return using Industry super funds but I also expose myself to the last 10 years of poor results and possible losses again, this given the uncertain market ahead of us.

    Even if I do this for the next 5-10 years I will be ahead.........

    Last question, in setting the SMSF can the cost of this come from my Super or do they come from me personally?

    Regards

    Shrek
     
  2. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    Hi Shrek,

    OK - you have asked a couple of things.

    Number 1 - the investment of super benefits into a high interest saving account.

    Firstly, to be clear - super is NOT an investment class like shares, term deposits or property - it is simply a vehicle to hold those types of investments (a very tax effective one I might add).

    I am not going to enter into a debate in regards to whether 5-6% is a good return or not as I am not an investment specialist - but remember with a SMSF you are going to have annual administration costs which will eat into those returns making your after fees return meaning your 6% will drop down to 5% if you have around $200k in your SMSF and are paying $2000 in administration costs. (you have the same costs in a industry super fund but they are more transparent in a SMSF as you are the one writing the cheques!).

    A lot of people jump ship from industry and retail super funds after periods of poor returns in those types of funds. Ensure you are doing it for the right reasons.

    Assuming you are 5-10 years from retirement, you should work out a plan on how you can grow your retirement savings as much as possible over that period - so I would suggest you seek advice from an appropriately qualified professional.

    There is a lot of good information about SMSFs and their suitability - some is good and some is not so good. First place you should look is here:

    Thinking about self-managed super (ATO)


    The ATO makes it seem that running a SMSF is an onerous, complex and expensive task - but honestly provided you have appropriate support from people who know what they talking about it is not.


    2nd thing - who pays for the SMSF set up costs:

    You SMSF can pay for it's own set up costs.

    In practical terms it means that you personally pay the costs, but after it is set up and receives cash from a roll-over/transfer from industry/retail super fund and has the cash it will reimburse you.

    Another couple of things:

    - You likely have some form of life insurance within a industry fund - if you close the account and transfer to a SMSF you will lose the insurance cover. Insurance will likely cost you more in a SMSF - be aware if this
    - Use a company as trustee of your SMSF - you will need to anyway if you are going to be the only member, but trust me - from an administration side it is 100 times easier than having individuals.

    I hope this answers your questions.

    Feel free to ask more

    Good luck

    SM
     
  3. SuperWarehouse

    SuperWarehouse New Member

    Joined:
    29th Aug, 2010
    Posts:
    3
    Location:
    Melbourne, VIC
    You can invest in a high interest bearing bank account for your SMSF. This is a good strategy as you preserve your capital.

    Do not use a corporate trustee as your arrangement is simple and you would want to keep your costs down. You can do the set-up and annual maintenance for your fund for under $500 each. Important to go for fixed fees in your fund to ensure it does not blow out.

    These fees can be an expense in your SMSF. So you do not have to pay for any of this in a personal capacity.

    Just do a Google search for low fees in SMSF.
     
  4. shrek

    shrek Member

    Joined:
    21st Jun, 2009
    Posts:
    13
    Location:
    Brisbane
    thanks

    thanks for the feedback

    Learing as I go here, based on a few "personal decisions" and loses with my super I am making a break to SMSF with a investment plan of HIGH interest Term deposit for the next 36+ months. with $200K kicking this off, and $4k per month being added to it I will gain my losses back easily at next to zero risk.

    Just and example with fees taken out $200K@7.5% over 3 years with $4K monthly contrubutions=$411,214.75 Which is turn = SAFE:)
    After 24 months I will reveiw my plans and relook at buying property.

    Cheers to all.

    Shrek
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Location:
    Sydney, Australia
    Where are you getting 7.5% term deposits? Or was that just for illustrative purposes?
     
  6. shrek

    shrek Member

    Joined:
    21st Jun, 2009
    Posts:
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    Location:
    Brisbane
    Interest Rates

    St George 7.25 or BankWest 7.5, you need to barter with them, I think it depends on the relationship you have with them also.

    Cheers
     
  7. AsxBroker

    AsxBroker Well-Known Member

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    Location:
    Sydney, NSW
    I hope your over 50 years old Shrek
     
  8. shrek

    shrek Member

    Joined:
    21st Jun, 2009
    Posts:
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    Location:
    Brisbane
    Not actually

    Hi Mate

    No not even close to 50 years old, only 38.

    but there is two member of the fund, my wife and I and together we will contribute from our work/Salary Scarifice about 40-50k (49999 max) combined, this is due to the limit of $25K per year per person (where if you go over this amount contributions tax goes from 15% to 46%,)

    Cheers
     
  9. TDFawaz

    TDFawaz Tony

    Joined:
    1st Jul, 2010
    Posts:
    40
    Location:
    Brisbane, QLD
    +1. :)
    cheers