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SMSF Updates

What Can You Invest in With a SMSF?

11 May, 2018

The increased control you have over your self managed super fund is what makes it an appealing option. It gives you, and the other members of the trust, the opportunity to determine the best investment strategies.

Your investment strategy should reflect your risk profile, your tolerance, your liquidity needs, your objectives, and the investments that you plan to use. No investment strategy is final, and more than one sound strategy can be incorporated in order to suit each member’s needs. Because circumstances and investment opportunities are ever changing, you can change your investment strategy too. This is possible because of the increased control you have over your self managed super fund.

Before making any investments, a trust deed must be written up. The deed should include all of the investments you and the other members are interested in and does not exclude any other type of potentially interesting investments.

An advantage of a self managed super fund and the control you have is that you have the opportunity to continue investing in growth assets during your retirement phase.

Certain Limitations of SMSF Investments

There are certain limitations that are placed on a self managing super fund with regards to investments. These are regulatory and laid out by authoritative bodies. An example of a SMSF limitation is that the SMSF cannot borrow funds for asset investments such as shares or properties unless the funds are borrowed from an LRBA (Limited Recourse Borrowing Arrangement).

A SMSF is also prohibited from investing in internal assets or acquiring assets through related parties such as your own assets or those of your own business. The trust cannot lend to any members or their family and friends, and it cannot be used as collateral in the case of you or another member looking to borrow funds.

What Investments Are Available?

Even though there are some limitations, a self managed super fund allows you to invest in practically anything that a person, as an individual, can. These kinds of investments include direct investments such as cash, EFTs, hybrids, income securities, bullion, bonds and shares. Businesses and business properties that are not related to a member can be invested in, as well as private unit trusts, managed funds, and cryptocurrencies such as Bitcoin.

Investments can be made in direct property, which includes residential houses, units or villas as well as commercial properties such as warehouses, land, retail spaces and factory units, as long as the properties are not utilised by any of the members of the self managed super fund.

Other available investment opportunities include non-traditional assets. These can be coin collections or even coin on their own, various antiques of varying value, art pieces such as paintings and sculptures, taxi plate licenses, and even ATMs.

Not all investments have the greatest potential, so it is wise to ensure you have knowledge before creating an investment strategy for your self managed super fund.

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