Can I save money with an SMSF?
There’s no doubt Self Managed Super Funds, or SMSFs, are popular.
According to the Australian Tax Office (ATO), there are more than 590,000 SMSFs, holding more than $650 billion in retirement savings1.
It’s not just the super-wealthy using them these days. Although the average balance is $1.1 million, around 20% of funds have balances below $200,0002.
A lot of these accounts may belong to smaller investors who thought running their own fund would give them better results, with lower fees, only to see their super balances drop during periods of global market instability.
So let’s take a look at how SMSFs have performed.
In 2014/15 (the most recent year available from the ATO) the average SMSF returned 6.20%3.
That compares with LGIAsuper’s MySuper Lifecycle option (under 75) which returned 8.18% over the same period4.
Over the five years ending June 2015, LGIAsuper returned 9.44% p.a. - well ahead of the average SMSF return of 7.04% p.a.
The average cost of running an SMSF is more than $12,000 p.a. Although a smaller fund will have lower fees, the ATO estimates a fund with a $200,000 balance typically costs more than $4,000 p.a. to run5.
LGIAsuper’s MySuper Lifecycle (under 75) and Diversified Growth options are considerably less expensive. A member with a $200,000 balance will pay a total of $1,440 in fees, just 0.72% of the account balance.