WEBVTT - Do I need a self-managed super fund? 0:00:01.600 --> 0:00:03.800 Welcome to How Do They Afford That, the podcast that 0:00:03.840 --> 0:00:06.800 peaks into the financial lives of everyday Australian. So I'm 0:00:06.800 --> 0:00:09.079 Michael Thompson. I'm an author and the co host of 0:00:09.080 --> 0:00:11.799 the podcast Fear and Greed business news. As always, I'm 0:00:11.840 --> 0:00:15.480 with Canna Campbell, financial planner and founder of SugarMammaTV, the 0:00:15.520 --> 0:00:21.800 financial literacy platform that you'll find just about everywhere podcasts, books, Instagram, threads, 0:00:21.800 --> 0:00:25.080 TikTok and more. Hello, Canna, what are we talking about today? 0:00:26.280 --> 0:00:28.840 I love that you asked me that we are talking 0:00:28.880 --> 0:00:34.120 about bit of context. First, I was talking recently with 0:00:34.159 --> 0:00:40.840 a friend about superannuation, which don't laugh. Don't laugh, because 0:00:40.880 --> 0:00:42.920 that is actually the kind of conversation that I have 0:00:43.000 --> 0:00:45.880 with people now, because that is the effect that you 0:00:46.080 --> 0:00:49.919 and doing this podcast has had on me. They asked 0:00:49.960 --> 0:00:54.680 me if I had a self managed super fund because 0:00:54.680 --> 0:00:58.240 they didn't know whether they needed one as well. I 0:00:58.320 --> 0:01:01.600 don't have a self managed super fund, but it did 0:01:01.640 --> 0:01:05.280 make me wonder who does have a self managed super fund? 0:01:05.640 --> 0:01:08.280 Kind of why would you have a self managed super fund? 0:01:08.400 --> 0:01:10.959 Who benefits from having a self managed super fund? How 0:01:11.040 --> 0:01:14.840 much it costs, what a self managed super fund actually 0:01:15.240 --> 0:01:17.800 is probably should have started with that one. So this 0:01:17.840 --> 0:01:19.679 is what we're going to get into today. Do I 0:01:19.800 --> 0:01:22.160 need a self managed super fund? Before we get into 0:01:22.200 --> 0:01:23.920 it though? And I know that you are itching to 0:01:24.000 --> 0:01:27.199 set me straight on all of this. Just please remember 0:01:27.240 --> 0:01:29.959 that everything we talk about is always general in nature. 0:01:30.000 --> 0:01:33.160 It is never personal investment, strategic or product advice. It 0:01:33.240 --> 0:01:35.520 is purely for financial education purposes only. 0:01:36.400 --> 0:01:38.600 That's correct. We don't think about your financial situation, so 0:01:38.800 --> 0:01:40.720 always reach out and speak to a financial planner on 0:01:40.800 --> 0:01:43.720 us then for personal advice in reference to your own situation. 0:01:44.000 --> 0:01:48.320 Yeah. Absolutely, Let's start with the basics, shall we, Right 0:01:48.400 --> 0:01:50.640 at the very very start. What exactly is a self 0:01:50.640 --> 0:01:51.520 managed super fund? 0:01:52.000 --> 0:01:54.760 All right? Think of it this way. So a normal, everyday, 0:01:54.960 --> 0:01:58.280 you know, retail super innuation fund is like going to 0:01:58.400 --> 0:02:02.280 a restaurant for dinner. You walk in, you get greeted, 0:02:02.360 --> 0:02:05.920 you get served, you can pick from the menu, it 0:02:05.960 --> 0:02:08.440 gets delivered to you, gets taken away, and you don't 0:02:08.440 --> 0:02:11.400 need to worry about cleaning up whatsoever. It's very easy 0:02:11.440 --> 0:02:13.320 and you can just sit back and relax and enjoy 0:02:13.360 --> 0:02:14.440 your time in the restaurant. 0:02:14.800 --> 0:02:16.720 You haven't been to a restaurant with me, have you? 0:02:17.600 --> 0:02:21.480 I'm the most indecisive person. And so if there's a 0:02:21.520 --> 0:02:24.080 group of people, I always make sure that I go 0:02:24.240 --> 0:02:27.919 last to order because I need the extra time to decide. 0:02:28.000 --> 0:02:30.480 And even then, by the time the waiter comes around 0:02:30.520 --> 0:02:33.120 to me, I will not have decided. And it is 0:02:33.240 --> 0:02:35.480 only the pressure put on me by the waiter to 0:02:35.520 --> 0:02:37.400 make a decision so that they can in fact do 0:02:37.440 --> 0:02:40.440 their job, that is what will help me decide. 0:02:41.040 --> 0:02:42.399 It's not annoying at all. 0:02:43.400 --> 0:02:46.240 That's exactly what Sean says, Please go on. 0:02:47.240 --> 0:02:51.519 So a self managed super fund is like hosting, say 0:02:51.560 --> 0:02:54.520 a dinner party instead of going to a restaurant, So 0:02:54.600 --> 0:02:57.239 all the responsibility falls back on you. You need to 0:02:57.240 --> 0:03:00.480 think about who you can invite, picking a date, time, 0:03:01.080 --> 0:03:04.560 organizing a menu, going to the supermarket and buying all 0:03:04.600 --> 0:03:08.800 the ingredients, obviously doing all the cooking, setting up the table, 0:03:09.440 --> 0:03:12.840 making sure everyone's happy, has a glass of wine in 0:03:12.880 --> 0:03:16.079 their hand or a refreshment, and that everyone's enjoying their meal, 0:03:16.120 --> 0:03:18.880 and then obviously cleaning up after everyone has left. So 0:03:19.639 --> 0:03:21.720 essentially that's the difference between the two. 0:03:22.040 --> 0:03:25.040 So essentially one everything most things are done for you, 0:03:25.320 --> 0:03:26.799 and the other one you're doing it. 0:03:26.720 --> 0:03:30.359 All your stuff exactly but with most self management funds 0:03:30.360 --> 0:03:33.639 you can only have maximum of six members, so your 0:03:33.680 --> 0:03:36.000 dinner party is quite limited, unless, of course, you have 0:03:36.040 --> 0:03:38.120 like a corporate trustee, which makes it a little bit different. 0:03:38.160 --> 0:03:41.440 But this is quite popular and more and more people 0:03:41.520 --> 0:03:43.280 have self managed super funds these days. 0:03:43.600 --> 0:03:48.560 How popular are they? I'm assuming that they are growing 0:03:48.760 --> 0:03:52.000 in popularity over time, particularly as there is a greater 0:03:52.080 --> 0:03:55.280 focus on superannuation and what we're all doing with our superannuation. 0:03:55.400 --> 0:03:58.520 There is more money going into super so I would 0:03:58.560 --> 0:04:00.760 just assume that as an extent that there are more 0:04:00.800 --> 0:04:05.640 people investigating smsfs as an option. That is a very 0:04:05.680 --> 0:04:08.120 hard acronym to say. I'm just going to continue calling 0:04:08.200 --> 0:04:09.520 them self managed super funds. 0:04:10.120 --> 0:04:13.000 Yes, you're right, about twenty five percent of all superinnuation 0:04:13.240 --> 0:04:16.520 assets are actually a self managed super fund. Really, there's 0:04:16.560 --> 0:04:19.640 over six hundred thousand self mensagent funds in Australia and 0:04:19.720 --> 0:04:22.960 one point one million members and there's a I believe, 0:04:23.080 --> 0:04:28.080 just under nine hundred billion assets in a self masup 0:04:28.160 --> 0:04:28.800 fund structure. 0:04:29.360 --> 0:04:31.359 That is a lot. It's a lot lot more than 0:04:31.400 --> 0:04:34.600 I was expecting. But if we look at the logic 0:04:34.680 --> 0:04:37.240 behind it, and it probably leads me to my next 0:04:37.279 --> 0:04:41.080 question of who is actually using a self managed super 0:04:41.080 --> 0:04:47.120 fund that perhaps they are more perhaps savvy investors, possibly 0:04:47.200 --> 0:04:50.640 earning more money, having a larger structure behind it, more 0:04:50.720 --> 0:04:53.159 assets to put into this self managed super fund, so 0:04:54.000 --> 0:04:58.560 they might actually be kind of sophisticated. Yeah, and as 0:04:59.160 --> 0:05:02.960 a higher represent of higher income earners and things. 0:05:03.279 --> 0:05:05.400 However, I will share a stat with you in a 0:05:05.440 --> 0:05:07.159 few minutes that actually contradicts that. 0:05:09.240 --> 0:05:11.560 Okay, come on, this is turning out, this. 0:05:12.080 --> 0:05:14.400 Will say, I'll save it because we need to talk about. 0:05:14.160 --> 0:05:16.080 Who is actually it is on track to become the 0:05:16.120 --> 0:05:18.919 most confusing episode we have done. We started with the 0:05:18.960 --> 0:05:22.359 most convoluted restaurant analogy I have ever heard. It was 0:05:22.400 --> 0:05:24.400 good until you suddenly said no, your dinner party is 0:05:24.480 --> 0:05:26.200 only allowed to have six people unless you have a 0:05:26.200 --> 0:05:28.760 corporate structure for your dinner party. Or okay, all right, 0:05:28.839 --> 0:05:31.920 this is this is getting intense. So okay, so who 0:05:32.080 --> 0:05:35.800 does tend to have one? Were sophisticated investors? Yes? 0:05:35.839 --> 0:05:39.160 So business owners, high income earners often mum and dad 0:05:39.200 --> 0:05:41.479 and investors as well, like to have a self manage 0:05:41.480 --> 0:05:44.480 super fun But you are right, it's typically people who have, 0:05:44.640 --> 0:05:47.640 you know, a large amount of experience when it comes 0:05:47.720 --> 0:05:51.200 to investing, and you know they have a you know, 0:05:51.240 --> 0:05:54.599 sophisticated investment strategy, because one of the key reasons why 0:05:54.600 --> 0:05:56.480 people would use a self manag super fund is because 0:05:56.520 --> 0:05:59.000 you have more control over the underlying investment. You know. 0:05:59.240 --> 0:06:00.720 I was talking to someone the other day who is 0:06:00.760 --> 0:06:04.720 actually invested in racehorse breeding in their self made a 0:06:04.800 --> 0:06:07.920 super fund. And I know people who've looked at including 0:06:08.080 --> 0:06:10.320 art as part of their overall investment strategy. 0:06:10.440 --> 0:06:14.599 So imagine it's hard to invest in racehorse breeding going 0:06:14.640 --> 0:06:17.040 through your your main super fund if you were. 0:06:16.920 --> 0:06:19.400 Going on under a retail fund. Absolutely, so it does 0:06:19.440 --> 0:06:21.960 give people that sort of control and flexibility. 0:06:23.240 --> 0:06:26.320 All right, is there then? And going back to the 0:06:26.400 --> 0:06:30.479 question asked of me by my friend and kind of 0:06:31.080 --> 0:06:34.440 do I have one? Why would I have one? And 0:06:34.480 --> 0:06:38.000 at what point should I start considering one? Is there 0:06:38.040 --> 0:06:42.520 a threshold at which it's something that you might actually 0:06:42.520 --> 0:06:45.440 start considering? For instance, I know that part of what 0:06:45.680 --> 0:06:46.960 part of the reason you would do it would be 0:06:47.000 --> 0:06:49.280 to have greater control over the assets and things within 0:06:49.320 --> 0:06:54.000 your superannuation. But is there a minimum amount that you 0:06:54.080 --> 0:06:57.679 need to have in order to make it at least Worthwhile. 0:06:57.880 --> 0:07:02.320 There's no official threshold as such, but because it's expensive 0:07:02.360 --> 0:07:04.919 to set up and to maintain, the general rule of 0:07:04.960 --> 0:07:07.560 thumb is between about two hundred and fifty thousand to 0:07:07.680 --> 0:07:10.880 five hundred thousand in order for to be cost effective. 0:07:11.080 --> 0:07:14.080 Okay, And that says the minimum the starting point, and 0:07:14.120 --> 0:07:19.040 then from there you're growing exactly. Okay, big one for you. Now, 0:07:20.120 --> 0:07:23.920 how do they work? I know this is a meaty, 0:07:24.000 --> 0:07:27.760 meaty question and there is no one set kind of 0:07:28.080 --> 0:07:31.720 structure for them, but just broadly, how do they work? 0:07:32.000 --> 0:07:34.440 Well, you have to apply online and then you have 0:07:34.480 --> 0:07:36.360 to register them with the ATO, and then you have 0:07:36.400 --> 0:07:39.080 to open up a bank account, and if you're going 0:07:39.120 --> 0:07:41.440 to be having an online trading account, you need like 0:07:41.440 --> 0:07:44.040 a broker account as well. So there is a lot 0:07:44.080 --> 0:07:47.680 of paperwork involved, and there's a lot of documentation about 0:07:47.680 --> 0:07:50.800 the investment strategy behind it, and also understanding all the 0:07:51.240 --> 0:07:54.520 rules and regulations that go into making sure that it 0:07:54.560 --> 0:07:58.240 is compliant and you understand like for example, the reports, 0:07:58.280 --> 0:08:03.080 the tax obligations, the audio and so forth. It's a 0:08:03.080 --> 0:08:03.880 lot of time involved. 0:08:03.920 --> 0:08:06.720 To be honest, there really is. It does sound as 0:08:06.800 --> 0:08:09.960 though it is the kind of thing that if you 0:08:10.000 --> 0:08:13.000 are considering it, it is a conversation straight away with 0:08:13.000 --> 0:08:15.080 a financial advisor, financial planner. 0:08:15.040 --> 0:08:18.040 And an accountant, and so they really do need to 0:08:18.040 --> 0:08:21.240 sit down and go through all the expenses and the 0:08:21.320 --> 0:08:24.520 responsibilities because they all those responsibilities and risks actually come 0:08:24.520 --> 0:08:28.800 back onto your own shoulders. So it's not for everyone. 0:08:29.240 --> 0:08:30.960 Okay, So if I was just to put together a 0:08:30.960 --> 0:08:35.680 bit of a checklist, you want to make sure that 0:08:35.720 --> 0:08:39.240 you have got enough assets to make it worthwhile to 0:08:39.280 --> 0:08:43.400 begin just as your initial kind of starting point. You 0:08:43.440 --> 0:08:47.040 want to actually make sure that you have a need 0:08:47.080 --> 0:08:51.000 for it that can't be met by an existing industry 0:08:51.160 --> 0:08:54.560 fund or a retail super fund, in that you want 0:08:54.600 --> 0:08:57.199 more control over where it is going, or that you've 0:08:57.240 --> 0:09:00.800 got very particular ideas for what you want to do 0:09:01.080 --> 0:09:03.760 with the money and the assets within your superannuation, something 0:09:03.800 --> 0:09:06.000 that can't be met by one of these other funds 0:09:06.000 --> 0:09:08.679 where they manage the whole process for you exactly. 0:09:09.760 --> 0:09:11.680 And you also need time. You know, there is a 0:09:11.720 --> 0:09:14.840 lot of time that is involved in running a self 0:09:14.880 --> 0:09:17.400 manage super fund as well as the risk and the responsibility. 0:09:17.480 --> 0:09:19.080 I want to get to some of the risks and 0:09:19.320 --> 0:09:21.600 the responsibilities as part of it, but just finishing off 0:09:21.679 --> 0:09:25.120 the checklist. Then you need to make sure that you're 0:09:25.120 --> 0:09:28.800 having this conversation with your accountant, with your financial advisor 0:09:29.120 --> 0:09:31.280 to see whether it is actually going to be beneficial 0:09:31.320 --> 0:09:33.120 for you or whether you're just going to be making 0:09:33.200 --> 0:09:35.920 a massive amount of work for yourself that could potentially 0:09:36.000 --> 0:09:37.400 put you in a hole exactly. 0:09:37.480 --> 0:09:40.440 And one of the most important conversations I'd recommend someone 0:09:40.480 --> 0:09:43.600 speak to a financial planner and an accountant about whether 0:09:43.720 --> 0:09:45.560 or not a self manship fund is right for them 0:09:46.000 --> 0:09:49.120 is what are the tax benefits. So I talk a 0:09:49.240 --> 0:09:52.240 lot about this thing called in specie transfer benefits and 0:09:52.320 --> 0:09:57.199 essentially is where you can avoid triggering capital gains tax 0:09:57.320 --> 0:10:01.400 when you go to retire because with most industry and 0:10:01.440 --> 0:10:04.960 retail superannuation accounts, when you shift your assets from accumulation 0:10:05.040 --> 0:10:08.280 phase to a pension phase, use trigger a capital gains tax. Now, 0:10:08.320 --> 0:10:10.520 obviously that capital gains tax depends on how long you've 0:10:10.520 --> 0:10:13.800 held that asset, but it ranges between ten to fifteen percent. However, 0:10:14.040 --> 0:10:17.920 with some special retail supernuation accounts, and there aren't many, 0:10:18.320 --> 0:10:21.280 but with self managed super funds, you can actually, depending 0:10:21.320 --> 0:10:24.640 on the structure, avoid having to pay this tax because 0:10:24.640 --> 0:10:27.560 they have this thing called an n specie transfer benefit 0:10:27.600 --> 0:10:30.600 within a self manage super fund, So asking your accountant 0:10:30.679 --> 0:10:32.719 and financial planner to sit down and explain and see 0:10:32.720 --> 0:10:35.480 whether that is actually relevant and applicable to you. If 0:10:35.520 --> 0:10:37.959 you have this self married super fund may actually give 0:10:38.000 --> 0:10:41.000 you some great long term tax savings if it's not 0:10:41.040 --> 0:10:44.840 available in your current retail or industry supernation fund. 0:10:45.080 --> 0:10:46.920 Okay, we're going to take a quick break. When we 0:10:46.920 --> 0:10:48.280 come back, I want to talk a little bit more 0:10:48.280 --> 0:10:50.960 about some of the benefits. Some of the big risks though, 0:10:51.080 --> 0:10:52.880 because you do need to go into this process with 0:10:52.920 --> 0:10:56.200 your eyes very much wide open, some of the costs 0:10:56.200 --> 0:10:59.000 associated with the regulation. We talked about, the paperwork and 0:10:59.040 --> 0:11:03.880 the red tape. It's starting to sound I'm not saying 0:11:03.920 --> 0:11:07.040 you've turned me off an SMSF, but you are certainly 0:11:07.120 --> 0:11:09.199 making it very very clear to me that there is 0:11:09.240 --> 0:11:10.120 a lot more involved. 0:11:10.559 --> 0:11:17.679 I'll explain why in second very good. 0:11:20.320 --> 0:11:22.920 Cana. We are talking today about superannuation. We are talking 0:11:22.960 --> 0:11:27.360 more specifically about self managed super funds and do you 0:11:27.480 --> 0:11:30.760 need one, who are they suited to, how do they work? 0:11:30.920 --> 0:11:33.640 Everything that you could possibly need to know about smsfs. 0:11:34.800 --> 0:11:37.680 We did touch on the main benefits. It is all 0:11:37.720 --> 0:11:40.160 about having greater control over your money, over your assets, 0:11:40.280 --> 0:11:44.040 and being able to be quite directive in terms of 0:11:44.080 --> 0:11:49.200 where it's going. Is that the number one benefit along 0:11:49.280 --> 0:11:51.719 with the tax kind of reasons as to why you 0:11:51.800 --> 0:11:52.280 might do it. 0:11:52.559 --> 0:11:55.000 I'd say that the two sort of key reasons. Obviously, 0:11:55.080 --> 0:11:56.920 you know, the bigger the self managed super fund is 0:11:56.960 --> 0:12:00.520 the potential savings as well, and obviously you have maybe 0:12:00.520 --> 0:12:03.480 some state planning benefits along the way. But also you 0:12:03.520 --> 0:12:06.160 can you know, if you've got say up to six members, 0:12:06.559 --> 0:12:09.240 you can potentially buy an asset that you wouldn't be 0:12:09.280 --> 0:12:12.120 able to afford to buy in your superannuation alone. So 0:12:12.280 --> 0:12:15.240 you know, you might see a commercial property and between 0:12:15.280 --> 0:12:17.520 you and your other members you can afford to buy 0:12:17.520 --> 0:12:19.480 that commercial property, whereas you wouldn't have been able to have 0:12:19.679 --> 0:12:22.200 that wasn't an opportunity that you can consider it was 0:12:22.280 --> 0:12:24.520 just you on your own and these other members. 0:12:24.600 --> 0:12:27.959 Are they typically kind of family? For instance? Is that 0:12:28.760 --> 0:12:30.920 what you would most often see or are you talking 0:12:30.960 --> 0:12:33.400 about kind of It wouldn't be colleagues and things. It 0:12:33.440 --> 0:12:35.600 is more the people that you are actually planning for 0:12:35.760 --> 0:12:36.960 retirement with, right. 0:12:36.880 --> 0:12:39.920 Yes, is the most common with families, and occasionally you 0:12:39.960 --> 0:12:41.040 know business partners. 0:12:41.320 --> 0:12:44.720 Okay from a dad investors, Yeah, sure. That is interesting though, 0:12:44.760 --> 0:12:46.960 that you would do it in order to buy a 0:12:47.000 --> 0:12:49.719 larger asset, which because I have heard about people that 0:12:50.080 --> 0:12:54.120 are buying property, buildings, et cetera, and then setting it 0:12:54.160 --> 0:12:56.440 all up with their financial planner and their accountant to 0:12:56.520 --> 0:13:01.160 actually make the most of having access to a larger 0:13:01.240 --> 0:13:04.000 asset and potentially an asset that's that's got a fairly 0:13:04.040 --> 0:13:08.120 good return attached to it. So in some circumstances different 0:13:08.120 --> 0:13:09.160 types of property. 0:13:08.960 --> 0:13:11.560 Yes, exactly. And I've seen situations where people have gone 0:13:11.559 --> 0:13:14.160 in together and they're you know, knocked things down or 0:13:14.800 --> 0:13:17.640 rebuilt things or renovated things and onsold them and they've 0:13:17.679 --> 0:13:20.520 never been able to have that opportunity when they're on 0:13:20.559 --> 0:13:20.960 their own. 0:13:22.559 --> 0:13:25.760 The risks, and this is probably the big one, and 0:13:25.800 --> 0:13:30.160 we've there are so many. Okay, all right, well let's 0:13:30.160 --> 0:13:32.480 try and condense them down into say two minutes. If 0:13:32.480 --> 0:13:34.840 you had to rank them, What would be the biggest 0:13:35.240 --> 0:13:38.080 risk here? Is it getting in over your head. 0:13:38.480 --> 0:13:41.360 There are huge responsibilities, so you've got to comply with 0:13:41.440 --> 0:13:46.679 some pretty complicated superannuation laws and the penalties are quite scary. 0:13:46.760 --> 0:13:51.040 So penalties up to forty five percent of the fund's 0:13:51.080 --> 0:13:52.600 market asset value. 0:13:52.720 --> 0:13:55.560 Oh wow, So it's not just a monetary figure that 0:13:55.640 --> 0:13:58.280 they nominate. It is actually based on the amount within 0:13:58.360 --> 0:13:59.319 the fund itself. 0:13:59.400 --> 0:14:01.720 It can be so it can be fines that you know, 0:14:01.960 --> 0:14:04.920 and then of course there's legal costs as well, and 0:14:05.080 --> 0:14:08.120 even up jail time up to five years if you 0:14:08.160 --> 0:14:11.160 haven't intentionally that is of course broken the laws. So 0:14:12.240 --> 0:14:14.000 this is why it's so important. You've got to go 0:14:14.120 --> 0:14:17.960 in eyes wide open to know that you are completely 0:14:18.040 --> 0:14:20.600 comfortable taking on all these risks and they stack up 0:14:20.600 --> 0:14:23.800 on your advantage. The other risk is obviously it's time consuming. 0:14:24.320 --> 0:14:26.600 I don't know a single person right now who has 0:14:26.640 --> 0:14:29.280 the time to take on these types of responsibilities. And 0:14:29.320 --> 0:14:31.600 I know I probably I am a bit anti self 0:14:31.600 --> 0:14:33.640 managed super funds, which I'll explain in a second, but 0:14:34.080 --> 0:14:38.360 you know, there's a lot of ongoing management required, investment decisions, 0:14:38.800 --> 0:14:42.080 huge amounts of paperwork. You know, you've got to make 0:14:42.080 --> 0:14:44.200 sure you've actually got the time to stay on top 0:14:44.240 --> 0:14:46.520 of these responsibilities and also all the deadlines that go 0:14:46.560 --> 0:14:50.400 along with the paperwork. It also can be really expensive 0:14:50.400 --> 0:14:53.200 for small superannuation balances, which is why I said you 0:14:53.480 --> 0:14:55.760 want to make sure that you've got a decent amount 0:14:55.800 --> 0:14:58.400 of money between you, because there's all the annual fees, 0:14:58.440 --> 0:15:00.840 the compliance costs, the professional co of an accountant, and 0:15:00.840 --> 0:15:03.280 I find your partner if you're using them, So sometimes 0:15:03.320 --> 0:15:08.120 it's not necessarily efficient. And then you've got the investment 0:15:08.200 --> 0:15:11.600 risk and only you'll put yourself to blame if things 0:15:11.640 --> 0:15:15.040 go wrong. And if you've got family members involved or 0:15:15.080 --> 0:15:18.560 so you're doing with friends, if they aren't happy that 0:15:18.760 --> 0:15:23.520 the returns and the results, it can cause issues, especially 0:15:23.520 --> 0:15:25.320 if you then need to wind things down and you 0:15:25.360 --> 0:15:27.640 need to debate buy someone out. And it's not a 0:15:27.680 --> 0:15:30.760 liquid asset. This is where the wheels can come off 0:15:31.320 --> 0:15:31.960 quite quickly. 0:15:33.680 --> 0:15:35.480 Wow, there's a lot of risks. 0:15:35.520 --> 0:15:37.480 I sound negative and blank's main. 0:15:37.400 --> 0:15:40.960 Why So why are you antiet? I mean there could 0:15:40.960 --> 0:15:44.040 be any one of those those things, but is there 0:15:44.040 --> 0:15:44.800 a main reason? 0:15:45.080 --> 0:15:48.120 Well, speaking from experience, so I have had so many 0:15:48.120 --> 0:15:51.000 people come to me and say, Canna, we've got this 0:15:51.040 --> 0:15:54.440 self managed super fund. There's so much involved. We didn't 0:15:54.440 --> 0:15:56.240 really understand what we were signing up to in the 0:15:56.280 --> 0:16:00.760 first place. Our accountant recommended it. It's expensive and when 0:16:00.760 --> 0:16:03.680 I sit down and look at what's going on most 0:16:03.680 --> 0:16:05.600 of the time. That money has been sitting in cash 0:16:05.720 --> 0:16:11.360 for the last five, six, seven years, So you know, 0:16:11.480 --> 0:16:15.600 and I think it was not recommended in the right 0:16:15.600 --> 0:16:17.800 type of way for these particular people. The money wasn't 0:16:17.840 --> 0:16:22.160 managed properly, and it's potentially have compliance issues because it 0:16:22.160 --> 0:16:25.640 hasn't followed necessarily an investment strategy, because the documentation wasn't 0:16:25.680 --> 0:16:28.640 done correctly. So you know, that could have sat in 0:16:28.720 --> 0:16:31.160 a retail or an industry fund in cash and they 0:16:31.160 --> 0:16:34.440 would have had no stresses, no paperwork. Yes, they would 0:16:34.480 --> 0:16:35.880 have had to pay some fees, but probably would have 0:16:35.920 --> 0:16:38.120 been cheaper than the self managed super fund. So I 0:16:38.120 --> 0:16:39.560 feel like a lot of people that they have been 0:16:39.680 --> 0:16:42.600 sold a self managed super fund for the wrong reasons. 0:16:43.520 --> 0:16:47.240 And you look at, okay, the retail fund and even 0:16:47.320 --> 0:16:51.400 industry funds really up their game in the level of 0:16:51.480 --> 0:16:56.680 services and product offering an ability to diversify your money. 0:16:56.720 --> 0:17:00.520 So it just is disappointing to see so many people 0:17:00.560 --> 0:17:02.720 get burned. And so I've so many times I've had 0:17:02.760 --> 0:17:04.760 to wind people's self made super funds down with the 0:17:04.800 --> 0:17:07.760 assistance of an accountant and get them into something that 0:17:08.000 --> 0:17:11.000 actually suits their needs and gets them back on track 0:17:11.040 --> 0:17:13.720 and make sure that their money is actually complied and 0:17:13.760 --> 0:17:16.879 it's actually aligned to their goals. So I'm not a 0:17:16.960 --> 0:17:19.280 huge fan and personally someone that she asked me the 0:17:19.280 --> 0:17:21.359 other day with her, I would set a self man 0:17:21.440 --> 0:17:23.480 super fund that you. Tom asked me, should we be 0:17:23.520 --> 0:17:24.760 looking at this? And I was like, as soon as 0:17:24.760 --> 0:17:26.000 I spoke Tom about it, and I was like, oh 0:17:26.080 --> 0:17:27.840 my god, forget it. Stop right there. Don't even bother 0:17:27.880 --> 0:17:30.199 talking to me about it again, because there is a 0:17:30.200 --> 0:17:33.080 lot of work involved, and there are great quality superinherotion 0:17:33.160 --> 0:17:38.719 platforms that do I think a superior job keeping your 0:17:38.720 --> 0:17:39.480 time and energy back. 0:17:39.560 --> 0:17:43.199 Okay, it sounds to me as though starting point is 0:17:43.240 --> 0:17:47.040 not even so much the amount of money you have 0:17:47.119 --> 0:17:50.760 in your super It is whether you are a savvy 0:17:50.800 --> 0:17:54.320 investor that you have the time and the knowledge and 0:17:54.400 --> 0:17:58.119 the willingness to devote what is going to be a 0:17:58.119 --> 0:18:02.399 fairly significant chunk of time and effort and energy into 0:18:02.480 --> 0:18:05.680 making sure that this is that this is working for 0:18:05.760 --> 0:18:08.800 you exactly, that it is not just something that you go. Okay, 0:18:08.840 --> 0:18:10.560 I know that there are multiple options out there for 0:18:10.600 --> 0:18:13.480 my superannuation. I'm going to go with SMSF because I 0:18:13.560 --> 0:18:16.199 know that you can do more with your money. For instance, 0:18:16.200 --> 0:18:16.440 I can. 0:18:16.440 --> 0:18:18.800 Access something that's not available on an industry or retail 0:18:18.880 --> 0:18:19.960 superinnuation account. 0:18:19.960 --> 0:18:23.480 Okay, it just sounds like it is absolutely something where 0:18:23.480 --> 0:18:25.480 you need to be talking to a financial advisor and 0:18:25.520 --> 0:18:28.080 an accountant to see whether it is genuinely right for you. 0:18:28.119 --> 0:18:29.600 It does worry me that you say that a lot 0:18:29.600 --> 0:18:31.720 of people have been kind of sold into self managed 0:18:31.760 --> 0:18:36.280 super funds, because presumably it is somebody within the industry 0:18:36.320 --> 0:18:38.240 broadly who has suggested it to them, but it's not 0:18:38.280 --> 0:18:39.200 quite right for them. 0:18:39.640 --> 0:18:42.800 And that leads me to my stat approximately sixteen percent 0:18:42.840 --> 0:18:45.359 of self manage super funds are sitting wholly in cash. 0:18:45.400 --> 0:18:49.119 So this is a problem that's still lingering, and you 0:18:49.160 --> 0:18:51.560 know it leads the question, hang on, are you really 0:18:51.800 --> 0:18:55.040 upholding all your members' best interests at heart? If you 0:18:55.280 --> 0:18:57.959 all this money is sitting just in cash doing not much, 0:18:58.080 --> 0:19:01.080 especially when you look at inflation, and that's when you like, 0:19:01.160 --> 0:19:05.840 you're opening yourself up to like your investment strategy being questioned, 0:19:06.720 --> 0:19:08.040 what's the game plan behind this? 0:19:08.840 --> 0:19:11.240 And so just in terms of the fees, the fees 0:19:11.640 --> 0:19:14.680 can be quite high, I would assume, because it's not 0:19:14.760 --> 0:19:18.359 just the administration fees and the fees associated with registering 0:19:18.359 --> 0:19:21.360 and maintaining it, but also the fees that you additional 0:19:21.400 --> 0:19:22.800 fees that you would need to pay in order to 0:19:22.840 --> 0:19:25.600 get the professional support from an accountant or from a 0:19:25.640 --> 0:19:28.080 financial advisor to put it all together and to maintain 0:19:28.119 --> 0:19:28.480 it right. 0:19:28.720 --> 0:19:30.879 You've got to pay for those reports to be completed, 0:19:30.960 --> 0:19:33.160 and you've got to obviously pay for all the auditing 0:19:33.320 --> 0:19:37.040 involved and returns to be lodged. So look, it can vary, 0:19:37.480 --> 0:19:41.679 but as a as a rough ballpark, between two to 0:19:42.000 --> 0:19:43.760 five six thousand dollars a year. 0:19:44.119 --> 0:19:45.600 Okay, that's a decent whack. 0:19:46.200 --> 0:19:47.960 When do you think we've got five hundred thousand dollars 0:19:47.960 --> 0:19:50.840 in super and you caught five, you know, years just 0:19:50.880 --> 0:19:54.600 going just to maintain it. And okay, you sometimes might 0:19:54.600 --> 0:19:56.280 find something better value for money elsewhere. 0:19:56.400 --> 0:19:58.520 You know. I don't like being negative on this show, 0:19:58.520 --> 0:20:00.800 and I don't like the this idea that we are 0:20:00.880 --> 0:20:02.840 kind of coming in here just to say, hey, don't 0:20:02.880 --> 0:20:05.119 try something. But it is just one of those situations 0:20:05.119 --> 0:20:08.280 where you need to have the conversation with a professional 0:20:08.680 --> 0:20:11.119 to see whether this is suited to you. It is 0:20:11.119 --> 0:20:12.440