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DIY Super Funds - An Overview
By Mike | September 6, 2010
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 come with some maintenance fees. It usually requires between $1500 and $4000 annually to maintain the funds. When time is taken to make wise buying and selling decisions, fewer transactions are needed, leading in turn to fewer ongoing fees. Super funds also carry tax concessions. Investment income earnings are taxed at a maximum of 15%, a better deal than the marginal tax rate. Many investors don’t mind paying these relatively small fees in order to manage their own money.
Again, it is up to the individual investor to decide if DIY super funds are worthwhile. The flexibility in choosing investments and the control of every penny is attractive to some. If the investment of time and a little money don’t sound like much work, self-managed super funds may be the way to go.
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Topics: Investing |
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