Investment ideas change every year, but the questions behind a good SMSF investment strategy stay the same. These six considerations will help you make every dollar in your fund work harder.
1. Learn your obligations
Before you start a fund, learn what a trustee must and mustn't do. You wouldn't drive without a licence. The ATO publishes guides for trustees, and your accountant can take you through them.
2. Assess the risk
Make sure the fund has enough money to invest across more than one kind of asset and still pay its costs. Many trustees skip this and get stuck partway. A sound strategy weighs the risk of each investment against what the fund and its members can afford.
3. Review the fund's assets
Review every asset the fund holds, and every asset it plans to buy, and read the paperwork and agreements carefully. That way the fund invests on the facts, not on pressure from others or false hopes.
4. Think about tax
Many people use an SMSF to save for retirement in a tax-effective way. Make sure your investment plans fit the superannuation and tax rules, which are set nationally and apply the same in every state. Tax shapes what the fund keeps from every return, so take care with this step.
5. Stay adaptable
Experienced trustees will tell you to be ready to change course. Review your strategy at least once a year, and whenever members' circumstances change, so the fund can move on from poor investments and take up better ones.
6. Consider insurance for members
The law requires trustees to consider, as part of the investment strategy, whether the fund should hold insurance for its members, such as life or disability cover. Decide what each member needs, so the fund and its members are protected if something goes wrong.
If running a fund yourself feels like too much, your accountant can look after the accounts and administration, and a licensed financial adviser can help with the strategy.