Prefer doing things your own way? If you want more control over your super investments, an SMSF offers the flexibility to make your own investment decisions and manage the fund yourself. 


But SMSFs aren’t right for everyone. They’re a lot more complicated than other types of super funds, and you need to make sure the benefits outweigh the additional obligations and risks. 


What is an SMSF?

A self-managed super fund (SMSF) is a fund that you set up and manage yourself. You can have up to six members in your fund, and every member is usually required to be a trustee of the fund.


The members, as trustees, are responsible for making all the investment decisions and ensuring the fund complies with all the various reporting and compliance rules. 


Even though there’s more flexibility about the types of investments you can have in an SMSF compared to other types of super funds, the assets within the fund must be held only to provide for members in their retirement. This is known as the sole purpose test. 


SMSFs have become increasingly popular in Australia. According to ATO data, there were 1.1 million SMSF members in Australia in June 2022.


Just like every other type of super fund, members of an SMSFs have to reach their preservation age or meet another condition of release to access their super. 

What other types of super funds are there?

In addition to SMSFs, there are four other main types of super funds available in Australia:

  1. Retail super funds. Designed to cater for a broad range of people, with a wide range of investment options and styles to choose from.
  2. Industry super fund. Run as profit-for-member funds, generally with low fees and a limited selection of investment options to choose from.
  3. Public sector fund. May be restricted to people working in the public sector as government employees (although some are open to everyone).
  4. Corporate fund. Set up by large companies for their employees.

You can read more about different types of super funds in our Guide to superannuation.

Starting balance for SMSF

There’s no minimum starting balance for an SMSF.


Until recently, the guidance from the Australian Securities and Investments Commission (ASIC) was that a person should only consider opening an SMSF if the fund will have at least a minimum balance of $500,000. However, ASIC has now recognised that the size of the fund is not the only factor that determines whether an SMSF is right for someone.

How much do SMSFs cost?

One of the main considerations when establishing an SMSF is how much it will cost to set up and run the fund compared to other types of super.


The set-up costs are for registering your SMSF and preparing the necessary documents to make your fund compliant, such as setting up a company to act as trustee and obtaining a trust deed for the fund. Many people engage an SMSF administration service provider to help them with all this.


On top of that, you’ll also have ongoing costs and expenses. This may include:

  • annual supervisory levy paid to the ATO
  • administration and accounting costs for your financial statements and tax return
  • auditing costs 
  • investment or financial advice costs
  • insurance premiums
  • interest expenses
  • management and administration expenses
  • legal advice costs if you have any specific legal requirements, such as complex estate planning requirements.

Depending on how you set up and manage your fund, and how many members you have, your ongoing costs may add up to thousands of dollars each year. However, unlike other types of super funds, many SMSF costs are generally fixed regardless of fund size. That’s why it’s generally agreed that SMSFs are more cost-effective if you have a higher super balance. 

Who can open an SMSF?

Generally, anyone can be a member of an SMSF. However to be a trustee (or a director of a corporate trustee) of an SMSF, you must: 

  • be at least 18 years old 
  • not have a legal disability that makes you incapable of making your own financial decisions
  • be a fit and proper person (e.g. not have any outstanding tax or super affairs such as unlodged tax returns or unpaid tax debts)
  • not be bankrupt, insolvent, convicted of an offence involving dishonesty, or meet one of the ATO’s other definitions of being a disqualified person

Using an SMSF to buy property

One of the main reasons why people want to open an SMSF is to purchase a property through their fund. While this is possible, investing in property via an SMSF needs to be considered carefully. It can result in lack of diversification and increased investment risk, because most of the fund’s assets may end up tied up in just one asset. You need to ensure the fund will have sufficient cash flow and liquidity to pay any expenses and the property’s expected rental yield and capital growth will line up with your retirement objectives.


There are also a range of strict investment rules that you will need to keep in mind when owning something like a residential property via an SMSF. 


For example:

• none of the SMSF members nor any of their related parties (such as their relatives) can live in or use the property for their private or domestic purposes, even if it’s just for a short period, such as a holiday 

• you can’t add a property you already own to your SMSF

• you can’t purchase a property from any of the SMSF members nor any of their related parties.

While there are some concessions that can allow a member or other related party to lease a business premises from their fund, these rules are complex and we recommend you speak to a financial adviser about them.   


There are also strict conditions about borrowing money to purchase a property through your SMSF. You can read about these conditions and other SMSF rules on the ATO website.

Pros and cons of SMSFs


You can pool your super with up to five other people (such as family members) 


Set-up and ongoing costs may be higher than other types of super funds 


You have more control over your investments and make your own investment decisions in line with the fund’s investment strategy 


If you choose the wrong investment strategy, your fund may not generate sufficient investment returns to provide for your retirement 


SMSFs can invest in a large variety of assets, including residential property (as long as it meets the sole purpose test and complies with other SMSF rules) 


The members, as trustees, must comply with a range of legal and regulatory rules and obligations. Therefore, they require more effort than being a member of a large fund. There are also significant tax and compliance penalties if your fund doesn’t comply with all the rules


Some SMSF costs may be tax-deductible 


Members don’t have access to conflict resolution services and must manage their own disputes



Most SMSF costs are fixed, so they will generally become more cost-effective as your super balance increases 


SMSF assets don’t have the same level of protection against theft or fraud as assets in other types of super funds


A fund that’s well-managed, with an appropriate investment strategy, has the potential to generate strong investment returns for members 


Life insurance premiums are generally higher for SMSF members compared to insurance policies within other types of super funds

What to think about before starting an SMSF?

SMSFs aren’t right for everyone. You need to have a good understanding of the SMSF rules and responsibilities, and be prepared to spend a significant amount of time making decisions and keeping your fund compliant. 


There are also a lot more risks involved with establishing and running an SMSF compared to other types of super funds. If you want to start an SMSF, make sure you’re doing it for the right reasons and you know what you’re getting into.


One of the best ways to minimise your risks is by working with professionals such as a financial and/or investment adviser and an accountant that specialises in SMSFs. While this means you will have to pay additional costs, the level of support and expertise you’ll receive will make it much easier to run your SMSF effectively and appropriately.  

What’s next?


Grow your super

Learn how to boost your super savings, and how it can benefit you. 



Retirement Planning

Create a strategy for your wealth that helps you retire with financial freedom, security, and purpose. 


Consolidate your super

Bring all your super into one account and save on management fees. 


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Information on this webpage is provided by Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 and Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468. It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the target market determinations (TMD) for our financial products at, which include a description of who a financial product might suit. You should read the Financial Services Guide (FSG) available online for information about our services.