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Investment Strategy

Is your SMSF Investment Strategy compliant and in order?Or are you putting your SMSF at risk?

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Investors Direct SMSF Guide - It's Not That Hard
Investors Direct SMSF Guide - More Details on SMSF
Investors Direct SMSF Guide - Education is Key
Investors Direct SMSF Guide - Avoiding Mistakes
Do you Have a SMSF Investment Strategy?

All SMSFs must have an Investment Strategy but not everyone knows what this is. When an SMSF is setup it usually has a generic or template Investment Strategy to tick the compliance box but many of these would fail if scrutinised under an audit. It’s quite possible many SMSFs are in breach of their Investment Strategy already.

For example, if your Investment Strategy doesn’t state you have allocated a portion of your SMSF Funds to property and you’ve bought one you could very well be in breach already and be putting your retirement funds at risk.

 

Quite often people “review” their Investment Strategy when they do their tax returns. Simply looking at your template and creating some minutes to say you’re still happy won’t necessarily make the cut either.

For example, you may have a dual member fund with the members being aged 35 and 50. This probably doesn’t sound like a problem but it could be. The investment approach or risk appetite of a 35 year old compared to the 50 year old would in most cases be different and this needs to be reflected in the Investment Strategy.

Must Consider When Setting Up a SMSF Investment Strategy!

Your Investment Strategy needs to take into account almost every aspect of your SMSF, the following examples are just some of the considerations you need to take into account in preparing your Investment Strategy.

  • Have you considered whether to get insurance?
  • Do you have enough liquidity in your SMSF?
  • What about the risks in your investments and their likely return?
  • Have you diversified your investments enough?
  • Are there members who will be retiring soon?
  • How will they be paid out and what are the costs this will incur on the SMSF?

This may sound daunting or even intimidating and for many people it is. However, it doesn’t have to be.

 

Here at Investors Direct we have the tools and expertise necessary in helping you to prepare your personalised SMSF Investment Strategy. Our SMSF Qualified Financial Planners can assess your situation and help you meet all the requirements that you need to keep your SMSF compliant and your retirement funds safe.

Super Laws & Regulations!

One of the key rules in the Superannuation laws and regulations is that the trustees of a SMSF must formulate, regularly review, and give effect to an Investment Strategy. The Investment Strategy must set out the investment objectives of the fund, and detail the investment methods the fund will adopt to achieve these objectives.

Trustees must ensure that all investment decisions are made in accordance with the Investment Strategy. They must also ensure that they have taken into account all the circumstances of the fund in formulating this Investment Strategy. Specifically, the SIS Reg 4.09 states that:

The trustee of the entity must formulate, review regularly and give effect to an Investment Strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following:

  • the risk involved in making, holding and realising, and the likely return from, the entity's investments, having regard to its objectives and expected cash flow requirements;
  • the composition of the entity's investments as a whole, including the extent to which they are diverse or involve exposure of the entity to risks from inadequate diversification;
  • the liquidity of the entity's investments, having regard to its expected cash flow requirements;
  • the ability of the entity to discharge its existing and prospective liabilities;
  • for a self managed superannuation fund--whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.
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Investors Direct Financial Group (IDFG) was established in 2001.
Our mission is to help our clients achieve and maintain their financial freedom.

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