Compare the pros and cons of SMSFs                    

Compare the pros and cons of SMSFs

Compare the pros and cons of SMSFs

Retirement is the goal for most Australians, but without a regular income, you cannot live comfortably. Over the course of an individual’s working life, the Australian Government has introduced a number of initiatives to encourage people to prepare for their eventual retirement. One of the most notable initiatives was the introduction of compulsory contributions to retirement savings into Superannuation during a low tax environment.    

Often, people save for retirement through the Self Manager super fund (SMSF), which allows them to invest their savings directly. However, SMSFs are subject to a substantial number of rules and regulations, which place a burden on their operators, making SMSFs unsuitable for everyone.  

Listed below are some reasons why you may want to run an SMSF and some reasons why you might not.


These are some of the benefits of SMSF:

Investment choice

In comparison with other superannuation funds, SMFs offer more investment options. As long as the investment meets the sole purpose test and complies with laws, SMFs may invest in almost anything. Direct investments are included in this.

Due to the removal of many banks’ SMSF lending products from the market, it has become increasingly difficult for SMSFs to borrow money to purchase assets.

Flexibility & control

Members of SMSFs can also serve as trustees, allowing them to tailor the rules to suit their circumstances and needs. This is not available in other superannuation funds.      

Directly managing your own super investments allows you to make quick adjustments to your portfolio in response to market changes or to take advantage of sudden investment opportunities.

Managing taxes effectively

You can more easily implement tax strategies that will benefit you and your circumstances by using SMSFs.


As both trustee and member, you will have a better understanding of the performance of the investments. Contrary to Industry or Retail Super Funds, whose performance is aggregated and released many months later.    

You will be able to keep track of the impact of your decisions and streamline the management of your SMSF by using SMSF administration software so that you are always up to date on the value of your funds.  

Pooling your retirement funds

Your SMSF can allow you to contribute to your superannuation with up to three other people. By investing in things one couldn’t do on their own, such as direct property, one opens up the possibility of investing in things that one would otherwise overlook.

Protecting yourself from creditors

Creditors cannot generally access superannuation. When someone transfers assets to a SMSF deliberately to avoid paying their creditors, clawback laws apply.


SMSFs may not be suitable for everyone, despite their many benefits. A few disadvantages of SMSFs include:

Duties and responsibilities of the trustee

In contrast to outsourcing investment decisions to an investment manager within an industry or retail super fund, if you choose to ‘self-manage’ your retirement savings, you are personally responsible for all investment decisions. The trustee must understand investment options and markets because poor investment decisions can negatively affect your fund’s assets and the retirement funds of other members. However, not everyone has access to this knowledge.

Living overseas

SMSFs must have at least a majority of permanent residents in Australia. In the course of living overseas or contributing to your fund, your fund may cease to comply with the law.