Personal circumstances should dictate SMSF exposure
While arguments as to the minimum account balance appropriate to a self-managed super fund (SMSF) persist, the reality for Philip La Greca, technical services director for SMSF administrator Multiport, is that the answer can vary greatly according to an individual's personal circumstances.
"It's an argument that comes up constantly when people start an SMSF with less than an economic amount of money in the fund," he said. "But you could draw the analogy that it's like buying a home.
"If you buy a house that's bigger than you need to start with, if you buy it before you have kids, is that the wrong option?" asked La Greca.
"Is it necessarily better to move into a unit, and then when you have two kids, you've got to sell the house and pay stamp duty when you buy another house?
"Both work, but the right option will depend a great deal on personal circumstances and which one you're most comfortable with."
Indeed for La Greca, cost should not be the only aspect of a self-managed super fund that prospective trustees considered.
"Is cost the only thing to be considered? Is investment choice? No," he said.
"They're both certainly factors but there's also flexibility, insurance, estate planning, the ability for it to be lifetime vehicle for you.
"The reality is that some people won't want to look that far ahead but others will say 'I know I'm going to need the bigger house, I'll buy the bigger house now.'"
Originally published by SMSF Essentials.
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