How much is needed?
The minimum viable SMSF balance is more about sustaining the costs required rather than the balance itself.
- For a small family, it could be around $300,000, while for bigger families, it could reach more than $500,000.
- SMSF’s annual costs range approximately $1,650 upwards. when referenced with 1% fees as a precaution, it would be viable for someone with at least $165,000 to run an SMSF cost without much trouble.
With that in mind, $165,000 may be the minimum required for a viable fund. However, it is ideal to have more breathing room of around $300,000. This is for the fund to at least reach $400,000 in 5 years. Doing so would be maximising the use of the system while also having enough space for potential growth. If all this seems overwhelming to you, you should consult an SMSF accountant in Perth who will with the best options while saving you lots of time.
Also read: Can You Withdraw Money From Self-Managed Super Fund?
What is a Super Fund?
Superannuation, commonly referred to as super, is money allotted into a super fund while working to obtain income upon retirement. The idea is that the more you can save while still capable of doing work, the more comfortable and satisfying your life will be when you retire.
Qualifying for Super
In Australia, super is mandated by the law. It applies for people aged 18, above capable of earning more than $450 a month, and are considered taxable employees.
Their employer is obligated to allot money into a super account under their name, consecutively managed by a super fund.
The employer contributes up to 9.5% of the employee’s gross income, including bonuses, commissions, and loadings under the law. This fund is called Superannuation Guarantee or simply SG. There is also the option of voluntarily contributing to the fund to maximise future benefits.
Related Post: Understanding Your SMSF: What Can You Use Your SMSF For?
Self-managed Super Fund (SMSF)
There are many other types of super funds, among them a self-managed super fund or SMSF. The distinction between SMSF and other types of super funds is that those who have them are usually also its trustees.
Therefore, SMSF members operate the fund or their own greater benefit while being responsible for complying with the super and tax laws.
If you have further questions about getting a Self Managed Super Fund we are happy to help. Request a chat with Phil today to see how Griffith’s Advisory can help you.