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Book a FREE consultation
and receive your complimentary eBook

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield™ FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

When Should I Review My SMSF Investment Strategy?

smsf investment strategy
SMSF Self-Managed Super Funds allow for the most control of your investments in super, providing the opportunity to invest in almost anything, including property and in a highly tax effective structure.

A Self Managed Super Fund (SMSF) investment strategy is not only a requirement under super laws, but it is also an important framework to enhance your savings for retirement. 

The investment strategy for your Self Managed Super Fund is your plan for making, holding, and realising assets that are consistent with your aspirations and goals. The volatility in the market that has ensued as a result of the COVID-19 pandemic has placed SMSF Trustees at risk of being outside of their investment strategy. This suggests it may be appropriate to review your current investment strategy to confirm it remains suitable and in line with your goals, or to adjust it accordingly.

What is an SMSF Investment Strategy?

The Trustees of an SMSF are required to ensure that an SMSF has a valid investment strategy, which outlines the strategy, assets the fund will invest in, and the allocations. The investment strategy must be considerate of the allowable investments noted in the SMSF Trust Deed. Your SMSF investment strategy should be in writing and individualised to the specific and relevant circumstances of your fund. 

Investment strategies should be considerate of the needs of the members, taking into account risk management, the age of the members, their needs for liquidity and growth and risk profile. While the laws surrounding superannuation don’t define exactly what is required in your investment strategy, however, they do provide some guidance on some key factors to consider when preparing your investment strategy.  

These factors are as follows:

  • The risks involved in making investments and their return, taking into account your objectives and cashflow requirements.
  • Diversification and the benefits of investing across numerous asset classes.
  • Liquidity of your funds investments and assets.
  • Whether the trustee should hold insurance cover.
  • Your funds ability to pay benefits when you retire, as well as other costs

A common pitfall for many SMSF’s is that the investment strategy is too broad and not defined enough. The Australian Taxation Office, which is the regulatory body of SMSF’s, has specifically stated that when formulating your investment strategy, it is not a valid approach to merely specify investment ranges of 0 to 100% for each investment asset.

cost of smsf

How Often Should I Review My SMSF Investment Strategy?

As recommended by ATO guidelines, your investment strategy should be reviewed at least annually by the trustees. By reviewing your strategy regularly, you can certify it continues to meet your current and future goals and objectives. 

Certain significant events may also prompt you to review your strategy. These include but are not limited to:

  • End of the financial year
  • A market correction
  • When a new member joins or departs your SMSF
  • When a member begins receiving a pension
  • A change in financial needs of the SMSF’s members
  • Trustees wish to undertake new investment opportunities that are not permitted in their current investment strategy

It should be pointed out that the Trustees don’t necessarily have to make changes to the investment strategy each time it’s reviewed. Reviewing your SMSF investment strategy regularly is a way to ensure that the strategy is still appropriate for the members of the SMSF.

However, if you do decide to change parts of your investment strategy, it’s important to note that any changes will require an amendment, which means signing off on a new investment strategy.

Yield Financial Planning is Here to Help

Ultimately, regularly checking in to review and ask relevant questions about your SMSF investment strategy is the wise approach to running your superannuation fund. This ensures that your SMSF is appropriate and on target to achieve the goals and cashflow requirements of the Trustees.

If you need assistance with implementing or reviewing your investment strategy for SMSF, the team of experts at Yield are here to help.

The team at Yield are retirement and superannuation experts, who are adept at navigating relevant legislation and the ATO’s expectations. Several of our clients enjoy the flexibility and cost benefits an SMSF can offer.

Important Note 
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.

About Yield™ - Financial Planner Melbourne

Who we serve – We help time poor professionals and business owners who intuitively know they should be doing more to improve their financial position and are seeking an expert to guide them on financial planning strategies. Our clients want personalised financial planning advice and to feel empowered and confident that they can achieve a secure transition to retirement.

What we do – We gain a deep understanding of your current financial position and preferences, what you value and want to achieve. We then help you develop a highly personalised financial plan, to show you how to make your money work harder for you. Ongoing we regularly monitor and measure progress against your plan projections, to show you how you’re tracking and help you manage change to your advantage.

How we do it – We apply our proven expertise in investment markets (Shares & Property), Tax and Debt structuring, Retirement Planning, Risk management and Estate planning, to help you reorganise the way you use your money to achieve your desired outcomes.

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