What Can Your SMSF Invest In?

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Building an Effective SMSF Investment Strategy for Retirement Security

As the trustee of your Self-Managed Superannuation Fund (SMSF), you hold the responsibility and authority to make investment decisions that adhere to the ‘sole purpose’ of providing retirement benefits. In order to fulfill this duty effectively, it is crucial to develop a robust SMSF investment strategy which ensures your investments align with your retirement goals and obligations as a trustee.

Developing an SMSF investment strategy is a critical step in ensuring your fund’s investments are aligned with your retirement goals. The SMSF investment strategy serves as a roadmap for making investment decisions that are in the best interest of your fund and its members.

The rules are specifically designed to ensure you do not invest in risky or inappropriate investments. You need to maintain your investments so they are there for your retirement, and you do not have to rely on a government pension instead.

An SMSF can generally invest in most assets, apart from artworks or collectables and the examples below. They must be done at ‘arm’s length’ and on commercial terms such as total market value. Income received from an investment must also be at the actual market rate of return.

SMSF Investment Restrictions and Permissible Asset Categories

The Superannuation Industry (Supervision) Act 1993 (SISA) does prohibit certain types of investments:


  • Cannot lend money or provide any financial advantage to a member, a relative or an associate of a member
  • Cannot borrow except in limited circumstances (limited recourse borrowing arrangements for things like property are one of these exceptions)
  • Must limit investment in, or loan to, ‘related parties’ to 5% of the market value of the Fund
  • Cannot buy assets from a member or a relative or associate of a member except for assets listed below

Section 66 of the SIS Act does, however, provide a list of assets that can be acquired from a related party, including:

  • Business Real Property
  • Listed Securities
  • In-house Assets
  • Widely Held Unit Trusts
  • Non-Geared Entities

Significantly as a trustee of an SMSF, you must ensure that all assets are held in the correct title of the SMSF and kept separate from any assets held by you personally.

In summary, developing a robust SMSF investment strategy is crucial for trustees to fulfill their obligations and ensure that their fund’s investments align with their retirement goals. By considering permissible investments, diversification, risk management, and regular monitoring, trustees can make informed investment decisions that are in the best interest of the fund and its members. It is advisable to seek professional advice from a qualified financial advisor or SMSF specialist when developing and reviewing your SMSF investment strategy to ensure compliance with legal requirements and best practices.

If you have any questions or concerns regarding your SMSFs, Kreston Stanley Williamson is here to assist you. Please don’t hesitate to contact us for guidance and discussion.

*Correct as of August 2014

*Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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