Is A DIY Super Fund Right For You?

Trying economic times have many people more worried than ever about their retirement investments. Stocks experience breathtaking highs and lows every day, leading to high stress for investors. Some have chosen to take control of the situation on their own and have turned to DIY super funds. Each individual investor will have to determine if these funds are a worthwhile exercise.

Those who manage their own investments will of course have control and transparency of the assets, but bear in mind that trading in stocks may take some practice. This isn’t to say that novices should avoid the practice altogether, but it is certainly helpful to have prior experience in buying and selling stocks. Because you will have complete control over the stocks you buy and sell, it is helpful to have done it before in order to make wise decisions. Since not everyone is a professional or natural stockbroker, many who self-manage super funds make conservative investments. The lower yield produced by these stocks is a tradeoff many are willing to make in order to see clearly where their money is going.

Anyone entering the field of self-managing superannuation needs to possess good time management skills. Everyone involved in DIY super funds is a trustee, so books and records need to be kept personally. This obviously takes time, as does the research into various stocks. Knowing the history of a stock and company is essential to wise investing. And once trading begins, floods of figures will present themselves that will need sorted and made sense of. Keeping things straight also keeps the tax office off your back, and that takes time too.

DIY super funds are not free. As the saying goes, you have to spend money to make money, and it is estimated that super funds require anywhere from $1500-$4000 annually to maintain; however, wise investing and fewer transactions leads to fewer ongoing fees. Additionally, tax concessions exist for super funds. Investment income earnings can be taxed at no higher than a 15% rate, which is different than the marginal tax rate. These are small prices to pay for investors who are fed up with the performance of others in handling their retirements.

Individual self-managers will have to decide whether DIY super funds are right for them. Many who delve into the practice enjoy the flexibility it affords when choosing investments and like keeping a handle on their money personally. Those who don’t mind taking some time and a little money and setting it aside might not ever do things any other way.

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