The Pros and Cons of Self-Managed Super Funds (SMSFs)

Self-managed super funds (SMSFs) have gained popularity in recent years, as more people seek greater control over their retirement savings. SMSFs are a type of superannuation fund that allows members to take a more hands-on approach to manage their investments. While SMSFs offer several advantages, they also come with risks and responsibilities. In this article, we’ll explore the pros and cons of SMSFs, so you can decide if they’re right for you.


Self-managed super funds (SMSFs) have become an increasingly popular option for Australians who want greater control over their retirement savings. Here are some of the pros of SMSFs:

  1. Control: One of the biggest advantages of SMSFs is the level of control they offer. Members can choose their own investments, including shares, property, and other assets. This flexibility allows members to tailor their portfolios to their individual preferences and risk tolerance.
  2. Tax advantages: SMSFs offer tax benefits that can help grow your retirement savings faster. Contributions made to an SMSF are generally taxed at a lower rate than personal income tax, and investment earnings are taxed at a maximum rate of 15%. Additionally, SMSFs can claim deductions for expenses related to running the fund, such as accounting and legal fees.
  3. Cost-effective for larger balances: SMSFs can be a cost-effective option for those with larger balances, as fees are generally based on a flat rate rather than a percentage of the balance. This can result in significant savings compared to traditional superannuation funds.
  4. Flexibility: SMSFs offer a wide range of investment options, including direct property ownership, art and collectibles, and overseas investments. This flexibility allows members to diversify their portfolios and potentially achieve higher returns.
  5. Estate planning: SMSFs can be an effective estate planning tool, allowing members to leave their retirement savings to their beneficiaries tax-free. This can be particularly advantageous for those with significant assets in their superannuation fund.
  6. Control over insurance: SMSFs offer greater control over insurance options, allowing members to choose the type and level of insurance coverage that best suits their needs.
  7. Investment transparency: SMSFs provide greater transparency into investments and fees, allowing members to monitor their portfolios and ensure their investments are aligned with their long-term goals.


While self-managed super funds (SMSFs) offer many advantages, they also come with risks and responsibilities. Here are some of the cons of SMSFs:

  1. Responsibility: SMSFs come with a high level of responsibility. Members are required to manage the fund in accordance with superannuation laws and regulations, and failure to do so can result in penalties and fines. This responsibility can be time-consuming and require expertise in areas such as taxation, accounting, and investing.
  2. Limited recourse borrowing: SMSFs are allowed to borrow to invest, but only under limited circumstances. This can limit the investment options available to members, particularly those who are looking to invest in property.
  3. Risk: While SMSFs offer greater control over investments, this also means greater risk. Members are solely responsible for their investment decisions, and poor choices can result in significant losses. Additionally, SMSFs are not covered by the government’s guarantee scheme, meaning that if the fund fails, members may lose their entire investment.


SMSFs offer greater control and tax advantages compared to traditional superannuation funds, but they also come with greater responsibility and risk. Before deciding if an SMSF is right for you, it’s important to weigh up the pros and cons and seek professional advice. If you decide to go ahead with an SMSF, ensure you have a solid understanding of the regulations and requirements, and consider seeking assistance from professionals such as accountants, financial advisers, and lawyers.

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