Financial Planning, Superannuation

The Pros and Cons of an SMSF

June 6, 2022

SMSFs are becoming increasingly popular among Australians. 

According to the ATO, the number of SMSFs increased by approximately 6% every year between 2012 and 2016. However, not everyone will necessarily benefit from an SMSF.

While an SMSF can assist you in growing your retirement nest egg, so can a regular super fund. An SMSF gives you flexibility and control of your retirement investments but they also come with greater responsibility and risks. 

It’s important that you educate yourself on the pros and cons of managing an SMSF before committing. Read on to learn more.

Advantages and Disadvantages of an SMSF

More control Time-consuming to manage
More investment optionsThe Need for Investment Knowledge
Ability to Borrow Money with Your SMSFPotentially higher fees


The Pros of an SMSF

More Control

With an SMSF, you (and the other SMSF trustees) have complete control over your investment decisions. This can be appealing to those who have specific investments and industries they plan to invest in. Additionally, they can allow you to take advantage of promising, new opportunities that otherwise seem risky for ordinary super funds. 

Even if you aren’t seeking a specific financial product, an SMSF can help you reclaim control over your super.

More Investment Options

Having complete financial control over your SMSF also gives you more investment options. 

An SMSF allows you to invest in a wide range of assets and a specific combination of these assets:

  • Property (residential and commercial)
  • Shares (Australian and global)
  • Cash and term deposits
  • Fixed income products
  • Physical commodities
  • Collectables

Ability to Borrow Money with your SMSF

A popular appeal to SMSFs is to be able to borrow money for investments – in particular, property.

SMSF owners are allowed to borrow to invest directly into property, managed funds and shares.  By borrowing, you can diversify your fund’s investments and improve your SMSF’s performance. There is also the scope for tax deductibility on your interest payments.

The Cons of SMSFs


SMSFs are extremely time-consuming to manage. Many people want flexibility but with this flexibility and greater control, comes more time to manage it effectively. 

As an SMSF owner, you are responsible for selecting and managing your investments. Additionally, you are responsible for making sure you are up-to-date with the regulations and following all the legislation around SMSFs.

Naturally, these activities take up time. If you’re wanting to save time managing your SMSF, you can engage a financial adviser to support you with investment advice and advice on changing regulations. 

The Need for Investment Knowledge

Successfully self-managing your superannuation fund also requires investment knowledge. 

Creating and managing an SMSF can be difficult for those who are not financial or tax experts. With greater flexibility and control comes more responsibility and risk.  

Without investment experience or knowledge, managing an SMSF can become very risky. 

Potentially Higher Fees

Aside from the costs of creation and administration, managing an SMSF can be costly. SMSFs frequently include accounting and auditing services. 

Depending on the type of investment, additional expenses may also apply. Legal and stamp duties, for example, on real estate investments. 


Need Advice on SMSFs?

If you are unsure whether an SMSF is suited for you or want help with your existing SMSF, consult with a financial advisor.

Do you want to get started with financial planning? Cambio Group is here to assist you at every financial stage of your life and achieve your goals within your desired timeframe. Work with us today!



Disclaimer: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.

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