The sole purpose of an SMSF is to meet the retirement and insurance needs of every member of a fund. So when you’re creating your SMSF’s investment strategy you must take into account the personal circumstances of each member.

Things to consider

The Australian Taxation Office (ATO) says trustees preparing and reviewing an SMSF investment strategy need to consider:

  • The diversification of the fund, that is – whether it has spread investment risk
  • Whether the fund can meet expenses with its cash and other liquid assets
  • Whether the fund will be in a position to pay benefits when members retire
  • Each member’s age, retirement expectations and attitude to risk
  • The risks involved in the SMSF’s investments as well as the capital growth and income requirements of the fund

Deciding on investments

Allocating different amounts of your portfolio to different kinds of investments helps balance risk and return over time. One approach to an SMSF investment strategy is to set a target allocation for each type of asset and an acceptable range of variance from this target.   

The strategic asset allocation would then be reviewed and changed as appropriate if, for example, a member’s risk profile were to change, or as members got closer to retirement.

It’s important to review your investment strategy regularly given circumstances can change.

Need some assistance? Request a callback from our SMSF specialist team, or take a look at our dedicated SMSF page.

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Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. All information in this article, including any information on taxation, is of a general nature only and is based on the continuation of present laws, rulings and their interpretation. As individual circumstances differ, you should seek appropriate professional advice.