SMSFs: the pros and cons SMSFs: the pros and cons SMSFs: the pros and cons

SMSFs: the pros and cons


Saxo Markets

Summary:  The establishment of a self-managed superannuation fund (SMSF) is a major financial decision that comes with plenty of opportunities, but also several risks to consider.

With an SMSF, you’re in charge – you make the investment decisions, so you can directly control and manage your retirement savings. However, you’re also responsible for the fund – from overseeing investment strategy and execution to complying with Australian superannuation and tax law.

Here are a few pros and cons to establishing an SMSF:


  • Total investment control: With an SMSF, you’re in complete control. You set the investment strategy in line with your own investing goals and timeframes, and you determine the assets the fund invests in. When market conditions change, you have full flexibility to adapt or change course.
  • Range of choice: All SMSF investments must be made on a commercial “arm’s length” basis, and must fulfil the “sole purpose test” of solely providing retirement benefits to members. Within this framework, SMSFs can offer a broader range of investment opportunities, including asset classes such as residential and commercial real estate. SMSFs also enable you to invest in less common asset classes, from artwork to physical gold and investments in some unlisted entities.
  • Pool super: Multi-member SMSFs can include up to six people. You can therefore pool your super with up to five other people, and potentially gain access to additional or more costly investment opportunities.
  • Transparency: As you are making the investment decisions for the SMSF, you have a clear line of sight on what is included in the fund’s portfolio. You will therefore be more aware of how your super monies are invested, and the performance of those investments.
  • Investment cost efficiency: Fixed SMSF costs become more cost-effective as SMSF balances increase.
  • Taxation benefits: SMSFs enable you to implement tax strategies that best benefit you and your personal tax situation.


  • Risk: SMSFs provide complete investment control – which has both upsides and downsides. If investment decisions go wrong, the responsibility is yours as trustee and the consequences are yours as the SMSF member. Maintaining an SMSF therefore requires some legal and financial knowledge, as well as financial market confidence.
  • Time and effort: Operating your own SMSF is quite time-consuming, even when using a professional SMSF administration service.
  • Compliance: As trustee, you’ll be responsible for your SMSF operating within the law, and violations may trigger severe penalties. SMSFs must follow the laws outlined by the Australian Taxation Office (ATO) and trustees have numerous regulatory and legal responsibilities. These governing laws and regulations may also change over time, requiring trustees to be constantly up-to-date on SMSF regulatory requirements.
  • Fees and associated costs: Fixed SMSF costs become more cost-effective as SMSF balances increase, but the converse is also true – fixed SMSF costs may be less cost-effective for smaller SMSF balances. Set-up fees, annual reporting, audit requirements, investment management fees and professional investment advice/planning fees can make a dent in smaller SMSF balances.

It’s important to consider all of these factors before deciding if an SMSF is right for you.


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.