I was told to set up a self-managed pension fund, but it is losing money. What should I do?

In 2019, I was convinced to open an SMSF (self-managed superannuation fund) and was promised that my money would generate significantly higher returns than my previous fund.

My balance is now only slightly higher than it was when I started, just under $300,000, despite five years of employer contributions. Some of the investments look like they could make some money, but they’ve been eaten up by all the costs. It’s hard to understand. There’s forex (foreign exchange), CFDs (contracts for difference), and other odds and ends that don’t make sense to me.

I’m three years away from retirement and this whole thing is really stressing me out. What should I do?

How anyone with any moral compass could recommend that you move into an SMSF and invest your retirement savings in a scheme that at first glance appears to be very aggressive and risky is beyond me. I am sorry that you had that experience.

I mentioned earlier that I don’t think SMSFs make sense unless you have a specific investment case that requires them (such as commercial property) or your equity balance is less than $1 million.

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It was later brought to my attention that there are cost-effective SMSF arrangements that are viable for lower account balances, so perhaps I was being a bit harsh here, but certainly few people would consider an SMSF suitable for retirement savings of less than $500,000.

While an SMSF is a feature of your current unsatisfactory situation, an SMSF is simply a structure in which you can hold your retirement savings. It has costs, but so do all super funds. Given your level of super savings, it is probably an expensive option, but I don’t think that is your main problem. The main problem seems to be how the money is invested.

Markets have been strong recently, and with employer contributions, you’ve likely seen a significant increase in the value of your retirement savings.