You may be asking, “How will I find out what investment is right for my SMSF?”

It is a really important question to answer.  SMSF investors can often have a bias, some towards property whilst others to shares. Typically these biases or preferences come down to past experiences and their perceived understanding of that investment.

One of the distinct benefits of SMSF is that you have control to choose your strategy, the timing of when to buy or sell, what investments to choose and to whom you may engage to assist where you are not the expert. There is good reason why well designed portfolios are diversified.

All investment classes run in cycles and it is for this reason that professionally designed portfolios are diversified to reduce the impact of dramatic fluctuation in returns. Everyone has a tolerance to loss. In fact it can be measured to determine what an individual’s tolerance to risk is. Based on this measurement portfolio construction can help to accommodate risk tolerance. It should also be said that quite often risk tolerance and desired returns do not often match. To put this simply we often desire higher growth returns but cannot stomach when a loss of capital occurs. This is where a professional financial adviser will help to work through these anomalies to determine if a change of lifestyle expectation, investment performance or risk acceptance or a combination of all is required to achieve one’s long term goals.

Related

• Shares
• Bellmont Securities
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