Author Topic: Aussie investors: online SMSFs or SMSF lites  (Read 664 times)

kiwiozearlyretirement

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Aussie investors: online SMSFs or SMSF lites
« on: July 31, 2017, 09:41:28 AM »
Hello fellow Aussies.

I am still unsure about what represents the best value.

Industry funds offer low cost index funds but the transparency about fees etc troubles me.

Some industry funds offer self investment options (so called SMSF lite in other threads) but the fees still seem relatively high and you are limited to what you can invest in e.g. having to hold 20% in cash etc. Scott Pape wound up his SMSF as he thought it was too expensive and overly complex. He recommends host plus index balanced fund (fees an incredible 0.02%). For those keen on a choice, He recommends Host Plus's Choice Plus but the PDS seems to have fees of at least 1% (or maybe 1.3%). Once you get up to 1 million this is $10000 to $13000.

Online SMSF platforms look cheap but they often are attached to more expensive broking systems, so maybe the ultimate costs are similar to a standard accountant set up.

Does anyone have any online SMSF platforms they are happy with? Was the system easy at tax time?

Or has anyone found a SMSF lite version where you are not having to hold considerable sums in cash etc?




mjr

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #1 on: July 31, 2017, 05:40:17 PM »
I will not use an industry super fund because I will not pay a cent towards unions.  I use a place called Green Frog Super for a fixed fee of $950 + three hundred and something for auditing and they let me do anything I want and are responsive to emails.

After all accounting, audit and regulatory fees, my expense ratio is 0.1%.  I can live with that.

Wadiman

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #2 on: July 31, 2017, 09:24:31 PM »
Recently setup with ESuper for my SMSF.

Love it thusfar and increased brokerage costs are a small price to pay for the additional flexibility.

Cost including annual auditing is $900pa.


bigchrisb

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #3 on: July 31, 2017, 10:30:03 PM »
I will not use an industry super fund because I will not pay a cent towards unions.  I use a place called Green Frog Super for a fixed fee of $950 + three hundred and something for auditing and they let me do anything I want and are responsive to emails.

After all accounting, audit and regulatory fees, my expense ratio is 0.1%.  I can live with that.

+1 on attitude to industry funds.

I pay for an accountant on my SMSF.  Works out a bit more expensive (about $2k).  My expense ratio is a bit higher, as I suspect my balance is a bit lower.

kiwiozearlyretirement

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #4 on: August 02, 2017, 10:03:49 AM »
If you have an online SMSF what happens when you retire (i.e. at preservation age) and convert the fund into a pension fund?
Do you still have to take out 4% per year?

What if you decide to shift it to an industry super fund (i.e. worried about the hassle of maintaining it) - would you have to pay all the capital gains even if you are post retirement age i.e. in the zero tax zone?


deborah

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #5 on: September 01, 2017, 09:18:10 PM »
No, I'm pretty sure you wouldn't pay capital gains.

mjr

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #6 on: September 02, 2017, 05:18:21 AM »
No, you wouldn't pay capital gains.
Yes, you would have to withdraw the minimum amount when shifting into pension mode regardless of whether it's an SMSF or industry fund, online or not.

deborah

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #7 on: September 02, 2017, 11:13:24 AM »
Yes, you would have to withdraw the minimum amount when shifting into pension mode regardless of whether it's an SMSF or industry fund, online or not.
Of course, you don't have to shift it all into pension phase - only enough to give you the income you want. However, from preservation age to 65, it is probably better to shift it all into pension phase, draw the 4% per year and recontribute any excess in June. This dilutes the percentage that is taxed when your heirs receive it. When you turn 65 you can't put any more into super unless you pass the work test, and you have to withdraw 5% per year, so at that stage, you may want to put some back into accumulation phase.

kiwiozearlyretirement

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #8 on: September 06, 2017, 09:56:34 AM »
Thanks everyone for your advice. As we cant retire in Oz we would have to wind up a SMSF and shift it to an APRA fund. A lot of what I have read says you do have to pay CGT in that instance. But from what some of you are saying you can transition to a pension phase and then start selling off to make pension payments and pay no CGT. Sounds great if that is the case.

I have been looking at choiceplus (the hostplus SMSF lite version). I think I was misreading the PDS when I looked previously as I saw a high management fee.  It seems to have a flat fee structure ($15 per month plus $1.50/week) totalling $258. Of course there is brokerage at $20 (22 incl Gst) per transaction <10000. So if you were contributing fortnightly brokerage would add up to $518 (so yearly total of $776). In the pension version the fees are $468 excluding brokerage - I guess you would have to pay the brokerage the same every time you sold shares to fund your payments. But still compared to any other funds which charge you a percentage, it seems cheap.
The choice plus option is similar to other SMSF lites where you cannot have more than 80% in shares (so I would leave 20% in their balanced index option (0.02% fee). You cannot have more than 20% in 1 share - so I would split money amongst 4 vanguard ETFs. Just not sure how to do it without incurring lots of brokerage. For example if you invest 10000 but end up having to buy 4 shares at $2000, that is still $80 in brokerage. I will ask them.

kiwiozearlyretirement

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #9 on: September 08, 2017, 09:32:28 AM »
After discussion with host plus, choice plus is as I suspected.
You have to split any monies 5 ways thus incurring 4 lots of brokerage each time. This may well reduce the cost effectiveness of this platform.
So then back to self managed super funds but what to do when we retire overseas. Does anyone know about these small APRA funds where you can get another trustee on board and maintain the SMSF while overseas?

kiwiozearlyretirement

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #10 on: September 16, 2017, 09:16:38 PM »
Well an update to my investigations.

One of us will be preservation age before we leave so can transition to pension phase and then rollover to APRA fund if necessary without incurring capital gains as others have said.
The other of us is still a decade off so will have to do the small APRA thing. Has anyone found a cheap one?
What is everyone doing who has retired early and travelling the world. How do you maintain the compliance of your SMSF if you are no longer a tax resident?

kiwiozearlyretirement

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Re: Aussie investors: online SMSFs or SMSF lites
« Reply #11 on: Today at 08:45:07 AM »
So a SMSF is looking more and more attractive to us. But I am now unsure about the individual vs corporate trustee structure. Corporate seems a safer option with just a bit more to pay up front. What do people have and what do you think?

Does anyone know how easy it is to transition from a smsf to a small APRA fund?
Can you do this without triggering CGT?