An SMSF investment strategy is a mandatory requirement for every Self Managed Super Fund. Upon establishing the fund, you will be provided with a generic template SMSF investment strategy which is vital for its success. Having a strategy that you will regularly review is not just a requirement under the laws of the super fund, but this will also help you grow your savings for retirement. The most important things to consider are the employment, age and retirement needs of all of your SMSF members.
A good investment strategy will give your SMSF a wide choice of investment options. Having a variety of investments will help you lower the risk of investment as this way you won’t place all your money in one place. Your SMSF needs to have access to cash so that it can pay minimum income stream payments, income tax and administrative expenses when they are due. So, when it comes to having a good strategy, investment strategy SMSF experts recommend not to have all of your fund investments in fixed assets, such as property for example.
As we mentioned above, the insurance needs of all fund members are an important consideration. You also need to think about who will be the beneficiary of the insurance. Remember, the investment strategy SMSF is not something you will just set up and then forget about. Instead, you need to be sure you will regularly review it in order to meet not just the current, but also the future needs of the members.
There are some situations when reviewing your investment strategy is a crucial step for the sake of your fund. Such situations include the cases when a new member joins the fund, when a member leaves it, or, when the super fund starts paying an income stream to a member. Those are great situations to reconsider whether an SMSF is still the right choice for you.
Nevertheless, reviewing your investment strategy does not necessarily mean that you need to make changes every time you do this. It is a good idea to document your reviews, including any decisions you have made so far, so that your Self Managed Super Fund auditor can see you have performed your obligations. If you do not keep your records you may need to pay penalties from your own pocket later on. You can always ask for professional help for your investment strategy, but regardless of the advice, you are the one who is completely responsible for all of your fund investment decisions. Be wise in that regard.