What can SMSF invest in?

Self Managed Super Funds offer heaps of benefits to the members like full control over the investment and tax advantages along with retirement perks. If you are wondering where your SMSF can invest, you are the right place. In this article we will discuss the SMSF investment strategy, what you can invest in and how you can develop your SMSF investment strategy.

Self Managed Super Fund Investment Strategy

The investment strategy of your SMSF should realise the investment objectives and retirement goals. 

  • The strategy should be in writing and kept safe.
  • It should consider the following:

          1. Risks - should consider the level of risk, asset composition, and reasons for diversification. 

          2. Liquidity of assets - The assets should be easily convertible into cash to ensure the fund’s expenses can be met.

          3. Insurance - Consider whether you need to provide insurance cover to your members or not. 

          4. Benefits - The ability of the fund to pay benefits to the members. 

          5. Diversification -  Investing in a range of assets ensures the members are protected from risk and volatility.

          6. Personal circumstances of the members like age, employment and retirement needs.

  • The investment strategy should be reviewed annually. All the decisions pertaining to the investment should be documented and provided to your SMSF auditor.¬†
  • The strategy should be reviewed whenever the structure of the fund changes. For example, when a new member joins.

What can SMSF invest in?

The members of the SMSF have full control over their investment decisions and can invest in a range of assets like:

  1. Shares (Australian and international)
  2. Property (Residential and Commercial)
  3. Overseas investments
  4. Cash
  5. Bonds
  6. Term deposits
  7. Physical commodities 
  8. Collectables and personal use assets - The collectable items cannot be used by the members. For example, the artwork can NOT be displayed in your house but it can be rented to a corporation or art bank. Similarly, wine or jewellery cannot be used by the members. However, these assets are volatile and you won’t be able to liquidate them.
  9. Business (only it is a non-related party)
  10. Cryptocurrencies like bitcoins
  11. Managed Funds

Key things to consider when investing in an asset 

  • The assets of the SMSF should be separate from the personal assets of the members
  • Investment in any asset should reflect its market value
  • Should be arm‚Äôs length transactions i.e. the parties act in their own self-interest and there is no collusion between the buyer and seller
  • The assets should not provide financial assistance to the members or their relatives
  • The sole purpose of the investment should be to provide retirement benefits to the members and should be in accordance with the SIS Act

How to develop the investment strategy for your SMSF

1. Before you establish an investment strategy consider the following:

  • Risks
  • Personal circumstances of the members
  • Liquidity of the assets
  • How does it meet your retirement goals, investment strategy, and goals?

2. Set the objectives for the investment and review it annually.

3. Minimise your risk by diversifying your assets.

4. Comply with the super laws as ultimately it is your responsibility to manage your SMSF.

‚ÄćBest investment strategy for SMSF‚Äć

The goals of your SMSF might vary, however, these three strategies might help you in deciding the assets you should invest in:

  • Capital growth: Invest in growth assets like property and shares
  • Income: Invest in income assets like bonds, stocks, and properties.
  • Capital preservation: Invest in high-yield bonds and term deposits

Need help with SMSF Investment?

Whether you are planning to invest in shares, property, or exotic items like vintage cars, artwork, wine, etc., it is better to take help from reliable SMSF advisers. At Bottom Line Control, we can assist you in setting up SMSF, managing your SMSF, and making investment decisions.

Give us a call at 07 5471 7077 or book online today.

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Source:

https://www.ato.gov.au/super/self-managed-super-funds/investing/your-investment-strategy/

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Bottom line Control, headed by Malcolm Chilman, have been by tax agent/accountant/book keeper for more than 10 years now, and I have nothing but praise for the efficient and cost effective way they go about their work. I have recently given them my SMSF as well and am impressed by the meticulous way he goes about the process of staying within the lines of the over-complex Superannuation law. Whether it is simple BAS bookkeeping or complex questions of tax law, Malcolm is always there to help. And if he does not know some intimate detail of our almost incomprehensible tax process, he knows where to find the answer. Every business has the occasional need for a quick answer, so one of the characteristics that I appreciate here, is Malcolm's ready availability, by phone and email.

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Thank you for your support, and assistance over the past several years. I personally feel that from our cooperative services that Ram Automotive has been able to grow toward the sustainable company of which is today. Bottom Line Control has given myself a great understanding of the companies finances, and also through ongoing fiscal performance meetings. Now knowing what Ram Automotive can expect for the future. I look forward to an ongoing relationship with Malcolm and Bottom Line control, to secure our future within our community.

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We changed all of our financials over to Bottom Line a few years ago and have been quite impressed with the service and advice we have received. Nothing is too much to ask of them. Thank you to Malcolm and staff for being there for us.

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We switched to Bottom Line Control after realizing that our previous accountant was giving us incorrect advice and charging a premium for it. We have now been using Bottom Line Control for several years and have found Malcolm to be thorough and reasonably priced. He always finds ways to save money on our taxes. Malcolm and his staff are highly responsive and very easy to work with. We highly recommend.

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