Self Managed Super

[Mavis]

For trading/Investing or administration of SMSF?

 

[Julia]

Thank you all , great feedback. I am growing in confidence every day that this is the right thing to do. Its just new.

Any thoughts on my second question on software. I had a look at the software section and can not believe the range.

First, you probably need to decide which way you want to go with the setup of the SMSF. Esuperfund (and I think a few others that are similar) apparently do the preparation of the Trust Deed/basic set up plus the first year's tax return and audit for less than $1000. Someone will correct me if I'm wrong about this.

Or you may want to use an accountant who specialises in SF's to arrange the set up, and separately to do your annual tax return and audit.
I have and like the latter arrangement. It's a bit more expensive but I prefer the personal contact. Also, I feel assured that if there are any regulatory changes my accountant will make sure I'm kept advised or he will take any necessary action.

Then you'll be required to prepare an Investment Strategy, outlining the purpose of the Fund and how you intend to invest to achieve that outcome, revising this document each time you change the investment strategy.
So have you decided how you believe you can best achieve the retirement benefits you expect, i.e. how will you invest and manage the available funds?

Are you comfortable with making your own investment decisions, e.g. which shares to buy, when to buy and sell, how much to keep in cash, etc?

 

[Boggo]

Or you may want to use an accountant who specialises in SF's to arrange the set up, and separately to do your annual tax return and audit.
I have and like the latter arrangement. It's a bit more expensive but I prefer the personal contact. Also, I feel assured that if there are any regulatory changes my accountant will make sure I'm kept advised or he will take any necessary action.

Agree, I have the same, not the cheapest way but still the best.

Then you'll be required to prepare an Investment Strategy, outlining the purpose of the Fund and how you intend to invest to achieve that outcome, revising this document each time you change the investment strategy.

A good accounting firm will tell you what you need to provide or what you need to change etc.
Most, if not all of the forms/documents that you require are available on this site.
The link is to the Investment Strategy form... http://www.lawcentral.com.au/CreateDoc/createlink.asp?docId=43

 

[harks11]

Once again thanks for the good words. I am 200% sure that the smsf is the way to go. Now just the mechanics of getting it set up. I see the sense in a accountant (who is a expert in smsf) to help with this and have started a search in Brisbane for a good one. Thats the challenge, the reference. I like the idea of keeping the business independent then if I have to change mangers / advisors if I need to. Esuperfund looks good as well. I assume that I would buy extra services from another party anyway.

Julia, happy to do the investment side, although realise I have lots of learning to do. I have a good non accountant view of what makes big business tick so that is a start. Have had a small holding of shares before The income strategy I think may be interesting as I have zero there, May have to ask dr google and the accountant for some help.

First step I think is to esuper or not. Interesting that esuper does not have a lot of competition in its area. It does get some nice words on this forum (and some others).

 

[harks11]

After toying with the decision for months its all go and after a week of heavy lifting.


Week 1 report

The last week I have immersed myself in smsf to get going. Interesting to watch the market go south and still watch the fees go out the door. I am blown away by the quality of the discussion on the forums and the willingness to help. What the hell have I been doing for the last ten years.

So where’s my head at.

Pass on esuperfund (still feel a bit green for them), and find a small company with and experienced person to administer the fund. (big companies still want a big number). Cost about 2k

Use an incorporated company instead of an individual approach on the fund. There are many upsides and few downsides. Extra cost minimal

I am thinking about shifting the money across from my existing account in blocks to minimise risk.

Not sure about the best trader / bank combination. Comsec / ANZ is widely used But Talk on the forum is about IB Traders being the best. I am not sure if that is a generic term or a company? I see a US company but none in Oz by that name

Is there much difference in the trader services? Bell Direct asking $15 or .1 Sounds like a good deal. Default is Comsec or Etrade

Next week

Still need to sort insurance.

Sign up with new administrator

Think about converting all current investment into cash in preparation for transfer

 

[Mavis]

With regards to Administration i cant stress enough the importance of having a qualified chartered accountant who specialises in SMSF and tax to provide this service to you. Before all the sceptics jump on me, no im not an accountant.....Failure to comply with the SIS Act can lead to significant penalties. CA's may be more expensive but you dont carry the risk of having a non complying super fund. Value isn't determined by cost - pay peanuts get monkeys....

It cost me - $995 for establishment
company trustee - $850 for estblishment
Adminstration, Audit, ATO charges - approx $2500 per annum

 

[awg]

Use an incorporated company instead of an individual approach on the fund. There are many upsides and few downsides. Extra cost minimal

1) keep the name of your company and smsf SHORT!

2) big disadvantage corporate,

most financial institutions will not give you access to high interest rate accounts...cause you are a PTY LTD, your a business mate, as far as their concerned..they have raped me repeadtedly on this matter

 

[hmmm]

Did i just notice Esuper's annual fee jumping from $599 pa to $699 pa

 

[freddy2]

Did i just notice Esuper's annual fee jumping from $599 pa to $699 pa

Looks like they did. They will have to change their claim "ESUPERFUND has never increased their fees since establishment and in fact has periodically reduced their fees in line with efficiency gains made." at
http://www.esuperfund.com.au/fees/comparefees.aspx

 

[awg]

Did i just notice Esuper's annual fee jumping from $599 pa to $699 pa

seems you are correct

I have noticed there seems to be more & more required from my end regarding paperwork for audit and tax etc.

This can only mean more at their end as well

Another observation I would make is that they must see an awful lot of messed-up returns, based on my opinion of the level of record keeping and understanding-what-you-are-doing required.

Messed-up returns would be undesirable in their low-cost, fixed price business model.

That is one reason suburban accountants charge so much, due to the onerous nature of compliance checking on an active, trading SMSF account

 

[harks11]

awg, are you talking about the transaction account or investing in fix term

2) big disadvantage corporate,

most financial institutions will not give you access to high interest rate accounts...cause you are a PTY LTD, your a business mate, as far as their concerned..they have raped me repeadtedly on this matter

 

[awg]

awg, are you talking about the transaction account or investing in fix term

both, but fixed term is especially bad.

St George is good.

Nearly all the rest will not allow a Corporate Trustee SMSF to access the same rates as a personal trustee SMSF.

It is very frustrating, and one reason I moved much of my term deposit funds to Hybrid Securities.

I would go so far as to say that I would not go the corporate route unless

A) You need or want to be a sole trustee

B) You already have substantial shares in your personal name

 

[harks11]

Thats a concern. I was looking at the V2 account at ANZ and the Westpac. Both of them are operating at about 4.5. Term deposits seem to be a bit higher but they are not working accounts. A little work required in this area it seems

both, but fixed term is especially bad.

St George is good.

Nearly all the rest will not allow a Corporate Trustee SMSF to access the same rates as a personal trustee SMSF.

It is very frustrating, and one reason I moved much of my term deposit funds to Hybrid Securities.

I would go so far as to say that I would not go the corporate route unless

A) You need or want to be a sole trustee

B) You already have substantial shares in your personal name

 

[So_Cynical]

It cost me - $995 for establishment
company trustee - $850 for estblishment
Adminstration, Audit, ATO charges - approx $2500 per annum

So averaged over 10 years .. it would cost about 2% annually if you had about 140K in super so if you were good enough to get a 10% return per year, 20% of that would be eaten up by your accountant doing basically what Esuper would do for less than half the cost of the accountant.

Seems a little over the top to me.

 

[Julia]

So averaged over 10 years .. it would cost about 2% annually if you had about 140K in super so if you were good enough to get a 10% return per year, 20% of that would be eaten up by your accountant doing basically what Esuper would do for less than half the cost of the accountant.

Seems a little over the top to me.

I don't know of anyone who would set up a SMSF with such a small sum as $140K. It's usually suggested a minimum is $300K.
The average fund value is around $900K.

In most instances, the costs don't increase as the value of the fund increases, so it's actually very cost effective.

I pay just $2000 p.a. for annual tax return and audit and all ongoing discussions with my accountant throughout the year. I think that's very reasonable for the service and professionalism I get.

 

[harks11]

I also think esuperfund is a good deal, but not as clear cut as one may think. From what I could see the comsec deal at $30 dollars is $10-15 a trade higher than best or .01 The interest at ANZ is a tad lower than say westpacs account and it looks like the V2 account does not pay interest on the first 5000 (may be a special for esuper). The alternate also has the ability to have more flexibility with traders etc. then of course there is the higher admin fee with the private way. On balance I thought there was only a few hundred dollars in it at most so am probably going the private route. There were of course an number of private big firms that were happy to give me gold service for 4 or 5 k..... I let that opportunity pass.

The only thing that I am worried about is awg comment above about a incorporated account not being able to access the good rates. I can not see that, so am worried that I have missed something. a number of diy super accounts are currently quoting 4.55 which seem competitive. The fixed term ones are obviously higher.

All tremendously interesting, exciting and a bit scary for this newbie

 

[Julia]

I
The only thing that I am worried about is awg comment above about a incorporated account not being able to access the good rates. I can not see that, so am worried that I have missed something. a number of diy super accounts are currently quoting 4.55 which seem competitive. The fixed term ones are obviously higher.

What do you mean when you say "a number of DIY super accounts are currently quoting 4.55"? Do you mean bank accounts? You are not limited to some bank account that calls itself a DIY Super Account.
You can use any bank account in conjunction with your Etrade or Comsec cash a/c as far as I know. I use Etrade and have an ANZ V2Plus account which I only use briefly for transferring funds into and out of Etrade.
The balance of my cash is at Rabodirect Online AT CALL and earning 6.4%, plus a smaller amount at call with ANZ earning 5.75%. So your 4.55 is way less than you should be able to get.

What I think awg would have been referring to is that with some banks, some of their specials are available just to people with personal accounts, as they deem SMSF's to be "business" accounts. That's a problem I've run into only rarely though, and have had deposits with many banks.
Rabodirect seem to have the best at call at present, and are great to deal with.

Don't be afraid, either, to approach a bank you already have an account with to ask if they will offer what a competitor is offering. I have a term deposit with SUN at 8% simply because I asked if they'd pay that.

 

[harks11]

......the balance of my cash is at Rabodirect Online AT CALL and earning 6.4%, plus a smaller amount at call with ANZ earning 5.75%. So your 4.55 is way less than you should be able to get.

What I think awg would have been referring to is that with some banks, some of their specials are available just to people with personal accounts, as they deem SMSF's to be "business" accounts. That's a problem I've run into only rarely though, and have had deposits with many banks.
Rabodirect seem to have the best at call at present, and are great to deal with.......
.

Thanks again Julia and awg. Stating what should be obvious to me but is not. I feel like a dog off a chain for the first time. Of course move the stuff around, dont let it sit and not work. And yes I had assumed that the cash was left sitting in the super account.

 

[awg]

What I think awg would have been referring to is that with some banks, some of their specials are available just to people with personal accounts, as they deem SMSF's to be "business" accounts. That's a problem I've run into only rarely though, and have had deposits with many banks.
Rabodirect seem to have the best at call at present, and are great to deal with.

Don't be afraid, either, to approach a bank you already have an account with to ask if they will offer what a competitor is offering. I have a term deposit with SUN at 8% simply because I asked if they'd pay that.

The problem is very specific to CORPORATE TRUSTEES, as opposed to trustee in personal names.

You ( Harks or others, should fully research the pros and cons)

No-one ever mentioned I would run into the problem

That is, if PTY LTD is in the Trustee name ( which it is for Corporate Trustees, but not other SMSFs), the banks and other financial institutions will not give you the same rate as ordinary SMSFs or personal accounts.

ANZ V2 is especially bad, their attitude was so arrogant and rude and downright hopeless, I withdrew over $400k in protest. AVOID!

Others that will not give the same rate include CBA, WBC, ANZ, AMP, various building societies.

St George and Rabo will.

 

[Julia]

The problem is very specific to CORPORATE TRUSTEES, as opposed to trustee in personal names.

You ( Harks or others, should fully research the pros and cons)

No-one ever mentioned I would run into the problem

That is, if PTY LTD is in the Trustee name ( which it is for Corporate Trustees, but not other SMSFs), the banks and other financial institutions will not give you the same rate as ordinary SMSFs or personal accounts.

ANZ V2 is especially bad, their attitude was so arrogant and rude and downright hopeless, I withdrew over $400k in protest. AVOID!

Others that will not give the same rate include CBA, WBC, ANZ, AMP, various building societies.

St George and Rabo will.

Many thanks for making that clear, awg. I've sometimes considered changing the structure of my fund but definitely won't now.

Re your comment about ANZ's arrogant attitude, this is something I've noticed in the last year or two. I've been with them pretty much for ever and used to be really happy with the service. I still am when it concerns the local branch, but the people in the call centre are simply woeful these days with their lack of willingness to be helpful. I've actually been thinking of writing a letter to Mike Smith about this.