The house behind us is for sale.
As you do, you live in the neighbourhood, and I wanted to have a sticky beak.
I walked through the front door. Went up stairs, and as I moved through the house another couple also came in. They were busy chatting away quite loudly and I was intrigued by their conversation.
The husband and wife continued to converse back and forward about the house layout, finishes and the work required. Then I heard “Interest rates have never been so low”.
This peaked my interest…
The real estate agent who was standing nearby then chimed in and replied “….and the beauty of this is you can buy this house within your superannuation fund”.
What?!!! I thought.
Being a financial planner this got me a little angry.
Here was an young real estate agent with presumably no formal financial education or a legal license dishing out advice. Telling people what you can and can’t do within superannuation.
You see the reality of the situation is, there is more you can’t do when you buy assets within a fund.
Imagine the implications.
The husband and wife make an offer thinking they can use funds from the superannuation to buy the property. Only to find out they can’t actually live in it (assuming that was their intention).
This is just a small example of how some casual banter can distort the true reality of what is involved in running a SMSF.
Sure, you may fit the profile for a self managed superannuation fund completely including:
- A healthy account balance
- The best intentions
- Investment capabilities and knowhow
- A good cash flow and income
But it still isn’t for everyone. Do you know why? Two words:
Accountability & discipline.
Something the vast majority of the world lacks.
Running a fund takes a whole new range of diligence and compliance. If rules aren’t followed then it becomes non-compliant which means there are big penalties at play. It is a complex process and isn’t for everyone.
I am not saying, don’t go down this path.
All I am saying is get all the facts around the time, effort and knowledge required to run a super fund and have a very clear understanding of what is involved.
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