Investment Strategy for SMSF - Why is it needed?

Trustees need to manage the fund’s investments in the best interests of fund members and in accordance with the law. You also need to separate your fund's investments from the personal and business affairs of fund members, including your own.

It’s important you have an investment strategy for your SMSF which outlines your fund’s objectives and specifies the types of investments your fund can make.

As well as ensuring that the fund’s investments are allowed, SMSF trustees are also required to formally decide on and document the fund’s investment strategy. This is just the framework you decide to adopt for making and maintaining investments. 

In deciding on your investment strategy, you would normally consider things like how much risk you want to take, what returns you are aiming for, what sorts of investments you want to make (e.g. shares, cash), whether your fund will tend to need a lot of cash (for example, if you are regularly making payments out of the fund such as pensions) and whether the fund needs to hold insurance for its members. 

There is no right answer, the strategy you adopt is completely up to you. This is part of the flexibility of an SMSF.

Bear in mind that an investment strategy is not a fixed document, you can also change it – what works for you today might not be the best strategy for you in the future. 

Heffron does not provide investment advice but we can deal with the legal documentation you need to put in place once you have decided on your strategy. We can also give you some examples of investment strategies we’ve seen in practice that might help you develop your own. Remember that these strategies are examples only.