Setting up and managing a self-managed superannuation fund (SMSF) comes with the critical responsibility of ensuring compliance. As a trustee, one of your key obligations is to establish and maintain an SMSF investment strategy that aligns with both regulatory requirements and your retirement goals.
What Is an SMSF Investment Strategy?
An SMSF investment strategy is a detailed, documented plan outlining how you’ll manage your fund’s investments to achieve your retirement objectives. This isn’t just a compliance exercise; it’s about making informed, strategic decisions to shape your financial future.
It’s important to move beyond generic strategies, such as “0% to 100% in any asset class.” The ATO expects trustees to clearly articulate their investment approach, including how and why they intend to invest their superannuation.
Creating an investment strategy takes careful thought. It should reflect your personal circumstances, long-term goals, and comfort with risk.
What your investment strategy should cover
Your SMSF investment strategy must address several key factors as required under Australian superannuation laws:
- Investment Objectives: Define specific goals based on your time horizon, risk tolerance, and desired retirement lifestyle. These objectives will guide your investment choices.
- Risk and Return: Consider the risks of making, holding, and realising investments. Evaluate whether the expected returns align with your fund’s objectives and cash flow requirements.
- Asset Allocation: Outline a mix of growth assets (e.g., shares, property, infrastructure and alternatives) and defensive assets (e.g., fixed interest and cash). Diversification is crucial to reduce risk across different asset classes and sectors.
- Liquidity & Cash Flow: Ensure your SMSF has enough liquid assets to cover expenses, taxes, and pension payments without needing to sell investments at an unfavourable time.
- Your Insurance Needs: Consider the insurance requirements of all SMSF members, including life, total and permanent disability (TPD), and income protection cover.
Keeping Your Strategy Up-to-Date
Your situation will likely change over time. Markets shift, laws update, and your personal goals may evolve. Review your strategy at least once a year—or whenever your life changes significantly—to make sure it still suits your needs.
It is also appropriate to address the rebalancing of your portfolio within the SMSF investment strategy. This involves bring the asset allocation back to its target as it will naturally drift due to contributions, payments, fees and market movements.
Why it matters
Putting together an SMSF investment strategy isn’t about ticking a compliance box—it’s about setting a path toward the retirement you envision.
Yes, it does take time and effort to think through your objectives, select appropriate assets, and factor in liquidity and insurance needs. But for those who are serious about shaping their own financial future, a properly structured SMSF investment strategy provides a clear framework to make informed, confident decisions.
The Guided Investor Approach
At Guided Investor, we understand everyone’s retirement journey is different. We’ll review your entire financial situation to design an SMSF investment strategy that suits your goals, time frame, and comfort with risk. For our ongoing SMSF clients, this gets reviewed and updated on an annual basis.
For general questions, start with Ask an Adviser to learn the basics. When you need more detailed guidance, our Tailored Advice can help you fine-tune your decisions and keep your SMSF strategy on track as your circumstances change.
