Minimum balance

Written by Hein Preller , Posted in Information

There is no statutory minimum balance to start an SMSF.

The government and most companies focus on the minimum dollar amount that is suitable for setting up an SMSF. However, we think a better criterion is the cost of running an SMSF compared to your Superannuation balance. If you’re going to pay someone thousands of dollars to set up and maintain your SMSF, you’ll need a high balance to justify the cost of administration. Superannuation Warehouse makes SMSFs available to many more individuals by keeping the set-up and monthly fees as low as possible.

The costs you’ll incur are as follows:

As a general rule of thumb, you’ll be doing well if your administration costs are around 1% of your SMSF. Most retail funds have an administration fee that works out at around 2.5%.

Based on the above, most people can run an SMSF cost-effectively with an SMSF Superannuation balance starting from between $50,000 and $100,000. Remember, if there’s more than one member in the SMSF you will quickly be in excess of these amounts.

If you’re considering share-related investments, in  our view the most efficient types  are Separate Managed Accounts. These are an excellent investment option if you want equities in your SMSF.

In summary, if you have $50,000-$100,000 in your combined Superannuation accounts, and you’re interested in managing your own money (as everyone should be), then an SMSF is well worth considering.

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Hein Preller

Hein is a Director at Superannuation Warehouse, specialising in setting up new SMSF's. Hein's company performs all the annual administration tasks consisting of preparing financial statements, lodging a tax return and arranging the audit.
  • Gurmeet Singh

    How can we avoid non- compliance while Lending through SMSF to non related party against some security.
    Is a Friend considered a related party.

    • https://www.smsfwarehouse.com.au Superannuation Warehouse

      Gurmeet,

      An SMSF can make loans to external parties given its purpose is in the best interest of the SMSF.

      Ensure that the SMSF investment strategy and Trust Deed allow for the SMSF to issue loans. A loan cannot be issued to a related party. Further guidance on Loans issued by an SMSF, see here:
      https://www.smsfwarehouse.com.au/smsf-investments/smsf-loans/loans-issued-by-an-smsf/

      Friends are generally not classified as a related party. Related parties are generally family members for example siblings, parents or children.

      • Gurmeet Singh

        Thanks Heir.
        I would appreciate your extensive knowledge in SMSF and your guidance for clearings the doubts.

        • https://www.smsfwarehouse.com.au Superannuation Warehouse

          Gurneet,

          Good guidance is to read the ATO booklets on what is involved in running an SMSF. We give the booklets here:
          https://www.smsfwarehouse.com.au/smsf-guide/

          Please let me know if there’s any specific questions you may have.

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