Name: Louise Biti
Other members of the SMSF: None
How long have you had your SMSF? Two years
Why did you start it up?
Like most SMSF investors, I wanted more control over my savings and retirement plans, with visibility on which investments were performing well and which were not. The ability to minimise fees due to my knowledge and skills was also a major consideration.
From an investment point of view, I wanted to transfer some existing shares into super and am also considering investment into direct property. So an SMSF made sense.
I have left some superannuation in a retail fund as it was cheaper to leave my life and TPD insurance in place in that fund, than to take out new policies.
How big is it?
Earlier in my career I focussed more on paying off my home loan than building my superannuation, as this gave me the flexibility and security to make my own life choices. I am now well on track to building my superannuation savings to meet my retirement goals.
Is it more or less difficult to manage than you thought it would be?
It is easy to underestimate how much work is actually involved and I probably fell into that trap.
It takes time and effort to manage the fund, as I am doing all of the work myself (except for audit). This is not a difficult exercise, but it does require commitment to set aside regular time to keep track of the fund, complete the administration tasks, research investments and monitor performance.
Do you enjoy managing it?
Mostly, yes. But sometimes when I am busy (and particularly around tax time) I question why I set one up. However, it has been a good decision and I am learning a lot about the day-to-day practicalities of running an SMSF.
Are you pleased with its performance?
Yes. The fund has achieved good and consistent growth, albeit with some ups and downs. I have been a little less aggressive over the last two years than I would normally be with super, given the long timeframe I am still facing, but I wanted to keep flexibility while I evaluated what structures and investments to use, both inside and outside super.
The fact that my total operating expenses for last year were around $700 has certainly boosted the effective returns.
What is your asset allocation?
The asset allocation as at 30 June was:
- Cash and fixed interest – 40%
- Listed shares – 31%
- Equity index funds and ETFs – 22%
- Listed property trusts – 7%
Over the last six months, I have started moving more of the fixed interest into equities. My main holdings in direct shares are in banking stocks.
What investments do you have outside of superannuation?
I am currently holding property outside superannuation and have been transferring share holdings into superannuation. Fixed interest is held across both. I am not sure if you can call my artwork collection a good investment but it is definitely held outside superannuation, as I like to be able to hang them on the walls.
My income protection and trauma cover are both held outside superannuation.
Do you use an advisor or any kind of service provider?
No. I only use a registered auditor because legally I can’t do this myself. It is also good to have an external auditor to act as a check on what I am doing. I use a discount broker to buy equities.
Is there anything else you would like to tell us about your SMSF?
There is nothing really remarkable about my SMSF. I try not to push the legislative boundaries too far and have not used reserve accounts.
I have a corporate trustee, which does add to the expense and administration but allows me, as a sole member, to have sole control of the fund. When I had my will redrafted last year I also included instructions for the transfer of shares in the trustee company. I also put in place a binding death benefit nomination. My Enduring Power of Attorney will allow the attorney to take over the role of Director, and therefore trustee responsibilities.
Louise Biti is an SMSF Specialist Advisor™ (SSA) and a co-founder of Strategy Steps and Aged Care Steps. Both companies support the financial planning industry with technical support and strategies that are client-focussed and practical. She is also a Director on the SPAA Board.
Important: 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. Consider the appropriateness of the information in regards to your circumstances.
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