Self-man­aged su­per funds a chal­lenge for ASIC

The Daily Examiner - - NEWS BUSINESS - NOEL WHIT­TAKER Noel Whit­taker is the au­thor of Mak­ing Money Made Sim­ple and numer­ous other books on per­sonal fi­nance. His ad­vice is gen­eral in na­ture and read­ers should seek their own pro­fes­sional ad­vice be­fore mak­ing fi­nan­cial de­ci­sions. Email: noel@noe

AC­CORD­ING to Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion com­mis­sioner Pe­ter Kell, reg­u­la­tion of self-man­aged su­per funds is be­com­ing one of ASIC’s big­gest chal­lenges.

The fed­eral gov­ern­ment body is par­tic­u­larly con­cerned about some prop­erty pro­mot­ers who are ag­gres­sively push­ing the strat­egy of form­ing a self-man­aged su­per fund and then us­ing that fund to buy

res­i­den­tial prop­erty through bor­row­ing.

ASIC chair­man Greg Med­craft states “SMSFs are one of our big­gest chal­lenges. Ed­u­ca­tion around them is quite poor but we are fo­cus­ing heav­ily on cor­rect­ing this.”

It’s great to see ASIC tak­ing ac­tion at last be­cause the su­per­an­nu­a­tion pool is now in ex­cess of $1 tril­lion and the preda­tors are mov­ing in to part you from your pre­cious sav­ings.

And this does raise sev­eral is­sues.

First, is a self-man­aged fund ap­pro­pri­ate for you?

In most cases the an­swer is a re­sound­ing no.

Next, is res­i­den­tial prop­erty the best in­vest­ment for you – in my view there are many bet­ter op­tions avail­able. And last, do you re­ally need to bor­row at this stage in your life?

This is a com­plex area but there is a wealth of in­for­ma­tion avail­able at the ASIC web­site www.mon­eysmart.gov.au.

The topics cov­ered there in­clude the costs to set up your own fund, the pos­si­bil­ity of los­ing valu­able in­sur­ance ben­e­fits if you move out of your present fund, the loss of ac­cess to cer­tain com­pen­sa­tion schemes if you suf­fer fraud, and, above all, the chance that your own self-man­aged su­per fund will not out­per­form your present one.

Just make sure you read the ASIC web­site in de­tail be­fore you change your ex­ist­ing ar­range­ments.

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