What you need to consider when preparing an investment strategy

(Article courtesy of the Self Managed Super Fund Association)


A key reason for many individuals choosing an SMSF over other superannuation funds is to have control over their fund’s investments.

However, you must balance this freedom of choice with your responsibilities as trustee to ensure that you invest within your SMSF in a manner that is prudent and in accordance with the superannuation laws. The intent of the laws is to ensure that your superannuation savings are protected for your retirement.

An important component of these investment rules is your responsibility as an SMSF trustee to formulate and implement an investment strategy (or strategies). An investment strategy is a plan for making, holding and realising fund assets that is consistent with your SMSF’s investment objectives. This plan or blueprint is not only required by the superannuation laws, but is also essential for guiding the fund to achieve a desired retirement savings outcome for the fund members.

You must consider a number of factors when preparing the investment strategy, which are:
the risk and likely return from your SMSF investments
the diversification of those investments
liquidity requirements; and
your fund’s ability to meet its payment obligations.

Recent law changes now require you to review your SMSF’s investment strategy on a regular basis to ensure that it reflects the current circumstances and objectives of your fund and members. It is also a requirement for SMSF trustees to give consideration to holding permitted insurance policies for one or more members of the fund (e.g., life insurance).

You may seek assistance from a financial planner to help prepare and review your strategy. However, the responsibility for preparing the strategy and implementing your investments in accordance with the strategy rests with you as the trustee.

To discuss this topic in more detail with regard to your specific circumstances, we recommend you seek specialist SMSF advice.  For more comprehensive education, information and resources for your SMSF, visit the Trustee Knowledge Centre


Disclaimer: The information contained in this document is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.