A properly constructed investment strategy is extremely important to guide you on your SMSF journey. Without an investment strategy that you can refer to, not only will you not met your legal requirements, but you may find it hard to reach your investment goals due to a lack of planning.
Supervision SMSF provides a template investment strategy in all new SMSFs that we establish. We include this strategy as a guide for you to improve and make your own.
It is really simple to create your own SMSF investment strategy. It need not be novel length and does not need to quote legislation or laws. Think of it as a mini business plan that can help to refocus you in times of difficulty or indecision. Financial Advisers can help you to create an investment strategy with great success, however if someone constructs one for you, it is imperative that you understand the contents so that you can refer to it quickly and simply.
These are the things that you should consider when writing your investment strategy:
• Diversification (investing in a range of assets and asset classes)
• Liquidity of the fund’s assets (how easily they can be converted to cash to meet fund expenses)
• Fund’s ability to pay benefits (when members retire) and other costs it incurs
• Members’ needs and circumstances (for example, their age and retirement needs).
• Consider Insurance as a way to deal with all of the above.
How to create your own:
1. Create headings from the above list.
2. Write a paragraph or two about your how the above title affects your financial goals and the investments that you may choose to reach those goals.
3. Include information about what you will do if things don’t go to plan and what action you would take in that situation.
4. Add a paragraph on how Life Insurance or TPD impacts on all of the activities above.
5. Get all Trustees/Members to initial the document and send it in to Supervision.
6. Review and refer to the document at least once a year or when you have a big investment decision to make.
As you can see you don’t need to be a lawyer to create your own SMSF investment strategy. It’s simple, fast and gets you thinking about how you can effectively deal with situations when they arise. If you need help to get your investment strategy in order call Supervision and we can help out.
[vc_video title=”ATO Video – SMSF investment Strategy” link=”https://youtu.be/PLxbGqnYJ30″][/vc_column][/vc_row]