DIY Super: The benefits of do-it-yourself superannuation

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If you have ever wanted to take control of your financial destiny, do-it-yourself superannation (DIY super) is perhaps one of the best ways to do it.

If Super Fund A averages 11% and Super Fund B averages 10% over the next few years, it doesn't sound like much of a difference. However, this is a 10% greater return, and can translate into Person A having $500,000 at retirement rather than Person B’s $450,000.

Some funds have returned 25% and even 40% over the last year, without much risk. They were buying shares in well-known companies such as Woolworths, AXA, Coles Myer & Soul Pattinson.

How did your super fund go by comparison?

Far from being stuck for choice, you can choose to invest in any of virtually thousands of different “off the shelf” super funds, or you can even start your own.

Your own Family Super Fund can invest into shares, listed property, direct property (including buying the house next door or purchasing your business premises). It may be able to invest into options, warrants and other things. Some FSFs that I have seen hold investments in antique cars and oil paintings.

The benefits of controlling your own destiny through DIY super, rather than letting someone else do it will soon become apparent. Not only can you control investment risk and return, you can control the taxation of the funds and you can protect your own assets and the assets of other members from creditors.

Assets (such as the business premises) can be at risk from devious people who may want to sue you and take your hard-earned worldly goods. These are protected inside the FSF. The “spouse from hell” may decide to divorce you, or the “in-law from hell” may decide to split from one of your children, taking half of the family assets or forcing the sale of business property, or the business itself. A FSF may be able to prevent this.

If you would like to review your do-it-yourself superannuation options (DIY super), give your financial planner a quick call. It's always a good idea to explore all your options.

Advice given is of a general nature only and you should seek specific advice relevant to your situation before proceeding with any investment decision.

Jeremy Britton is an active Financial Planner who believes that investing is for everyone. He donates resources to any investment student who wants to learn.

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Thanx Jeremy...
Your article says:
"...Your own Family Super Fund can invest into shares, listed property, direct property (including buying the house next door or purchasing your business premises)..."
Our business premises were purchased via a loophole that allowed us to fund property via super, and we purchased July 1999, Before critical date 11/8/99.
We recently went to a lot of trouble to get our SUPER FUND out of debt for the sunset clause of 2004(?).
Can you or any reader comment on this facility as we need to re-build at the premises and are under impression SF can't carry debt.
Kind regards, TP. TP from Adelaide
Run your own super ........sounds good but is it for YOU?
But it can be the beginning of a nightmare.
First you really need $150,00
Then understand ALL the SMF rules.
Then be prepared for record keeping chores, Audit costs Accounting Fees etc etc .If you dont keep up with all the regulatory requirement then you must pay for someone to do it. Ask yourself ...is that really how you want to spend your leisure time ...If so go for it .
The alternative ... Find a Financial Planner who takes time to listen to your needs , recommends a suitable fund that you understand , is prepared to ensure you pay the lowest fees , be accessible whenever you have a question , suggest strategies that work for you.
The truth is many Self Managed Super funds just stagnate as contributions are left in cash .
Are antiques cars or oil painting really appropriate investments of are you fooling yourself putting personal use assets into super ?
Do youself a favour find out the facts .
Alan DELLER Licenced Financial Adviser AFSL 232498 Financial Lifestyle Solutions
The above is general advice only. Alan DELLER FPA CFPA from Brighton Victoria
Gday TP--- yes, the super fund cannot borrow, you are correct. However, the SMSF may be able to enter into an agreement with a Trust or another structure; with the other party borrowing and the SMSF putting up its own cash. This question crosses over some areas, so you would need to talk to your accountant, solicitor AND your financial planner for the best outcome. A curly question indeed, but one that may have a satisfactory outcome. Jeremy Britton DipFA SA(Fin), Financial Planner, Professional Investment Services Pty Ltd, AFSL 234951 from Sunshine Coast
Hi Alan----the advice was *NOT* that ALL people everywhere should have a FSF or SMSF, just that it was a possibility.
Obviously each client will want a tailored plan to allow them to do what they want to do; this is why we have general advice warnings and why people pay Financial Planners for more specific advice! 8-)
Many CPA's would happily do the auditing chores and make things simple for their clients, that is their job. I would ask, Alan, do you have a SMSF? Are you qualified to advise on them? My SMSF is easy to run because the CPA does most of the work and I just look at the investments periodically.
While a SMSF may happen to be over $150k, SMSF's do not have a minimum legal requirement ---the justification of amounts and contents will be at the client's discretion.
Some of my clients have cars and paintings inside super that do not consist of personal assets and are legal under the "Sole Purpose Test". Conditions DO apply and clients must be careful. However, as a SMSF is usually supervised by a Financial Planner and a CPA, there is less room for client error. Caveat emptor.
Some clients are far more qualified than I am, in the areas of trading cars or fine art. If they can double their money safely there, and do it legally, I will let them. Same with buying the house next door or business premises.
As for the stagnating cash and the loss of leisure time, I would consider that not only a broad generalisation but also an overly negative generalisation. Most readers on this page are active in their learning and know the value of "do what you can do well; outsource the rest".
Thanks for your opinion, Alan. I trust that all readers will do appropriate research before investing into anything, SMSF or otherwise. Jeremy Britton DipFA SA(Fin), Financial Planner, Professional Investment Services Pty Ltd, AFSL 234951 from Sunshine Coast
Agree with Jeremy 100% - best thing I ever did was to establish an SMSF. Audit requirements and fees are not unreasonable, and the returns from "risky" investments like Commonwealth Bank and BHP have been excellent.
Maybe not for everyone, but most definitely worthwhile for those interested enough in their future to invest some time and thought now. Greg from Brisbane
Hi Jeremy, I am with you on this one - good thinking and thanks.
I am interested in your comment re SMSF buying the house next door? I thought that residential property was a no-no under the ATO rules?
Your suggestion re a strategy for borrowing is a good one - thanks.
Kind rgds,
Jeanne Jeanne Rasmussen from Yarramundi (near Sydney) Australia

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