At least half a decade ago my family and I were thinking of moving to a new home. We’re still in the same house, but our experience has meant we now spend time reviewing all our investments at the end of every year.
When we were toying with the idea of moving, we contacted a number of real estate agents; all of them were happy to try and sell our house before the end of the year. Only one of them suggested we wait until the New Year.
This agent said that in his experience, late February was a better time to begin selling a house because we were likely to get a higher price than if we tried to sell before year’s end. His rationale was that more people would have decided to move house after coming back from their Christmas holidays.
The moral of the story
I think our real estate agent had indirectly hit on something very important for every SMSF investor. That is, when our work is done and the busy world is all too briefly hushed, we actually have the space and time to think some important issues through – and there are many important issues you need to think about when running an SMSF.
So what are some of the structural areas you should think about these holidays?
Your investment strategy
Now is a good time to review your SMSF’s investment strategy. Ask yourself these questions:
- What objectives does your fund need to achieve?
- Will the assets your SMSF owns help or hinder attaining these objectives?
- What are your fund’s cashflow requirements, especially if a member of your fund dies?
- Will your fund be able to meet its pension income obligations?
For more information, read Creating an investment strategy and A sample investment strategy.
Fees and expenses
I’ve got in early this year on this particular point and have asked our financial adviser to detail, in dollars and cents, how much we’re paying him for all our investments and life insurance policies. You should consider doing the same. As you know, it’s hard to earn money and far too easy to spend it, and financial services in Australia are expensive. Don’t be afraid to ask for a discount or shop around.
Your fund’s advisers
Do your fund’s advisers suit your needs and objectives? Should you get a second opinion about your fund?
How much longer will you work?
Are you thinking about retiring permanently or even reducing your working hours? If so, you need to carefully consider your super arrangements. Please don’t assume that everything will fall immediately into place. It can sometimes take five years to structure a person’s financial affairs to be appropriately set-up for retirement.
Will you have enough for retirement?
What sort of lifestyle do you want in retirement? How will your super provide the income you need for your likely retirement timeframe?
Family budget
Do you have a family budget? If you’ve never made a family income and expense budget, then I urge you to do one now. You’ll never have any form of financial control or be able to plan for the future until you stump up the courage to complete this task.
Once that’s done, put your feet up, pop open a bottle of champagne and enjoy the new year!
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.