While there is no legal minimum balance required to set up an SMSF, ASIC and most financial advisers generally recommend having at least $200,000–$500,000 in super before establishing one. This is because the fixed costs of running an SMSF — auditing, accounting, tax returns, and administration — typically range from $3,000 to $6,000 or more per year, and these costs represent a much higher percentage of the fund’s assets at lower balances.
For smaller balances, the fees of an SMSF can easily outweigh the benefits compared to staying in a retail or industry fund. The ATO’s own research suggests that funds with balances below $200,000 often have lower returns than comparable APRA-regulated funds once costs are factored in. It’s important to weigh up the control and flexibility of an SMSF against the real cost of running one.