Should I set up a SMSF?

Hi Scott,

I have inherited $500,000. My existing super fund balance is $140,000. I own my home and have an investment property (value $500,000) that I owe $230,000 on. I plan to work for another five to ten years. My accountant is recommending I set up the SMSF as a 'tax structure', saying it is the 'last tax haven' available. I am keen to buy more property with the funds in the SMSF. What do you think?

Greg

Hi Greg,

Here’s a car analogy:Your accountant is selling you on how wonderful cars are -- ‘beats the hell out of walking!’ Of course you could buy any old car to get you round, but your accountant is suggesting you rent a car from him. (Perhaps I’ve been watching too much Top Gear, but the analogy I’m using is the ongoing fees in an SMSF that would flow to the accountant’s pockets.)

However, if you were sitting across the desk from me, I’d suggest you’ve already got too much exposure to residential property through your own home and investment property. I’d suggest that diversifying into local and international shares would be a smart idea -- and generally share funds give a better income yield in retirement with much less hassle.

Speaking of hassle, I’d ask you about how active you (and your partner) want to be with your investments. If it’s not really your thing, I’d suggest you try an ultra-low-cost super fund. But then again I’m not a car salesman.

Scott