So, what’s all this talk about Self Managed Super Funds, or SMSF’s? Well, it’s basically when you setup your own fund, and you control the investments. One of the most important factors with setting up a SMSF is to have an effective Self Managed Super Fund Investment Strategy (IS).
Legally, an SMSF must have a documented IS. For most people that run their own SMSF, put this together just so they can tick the box. There are a lot of Fund Managers and Accountants out there that will happily take your money to put together an investment strategy for your SMSF, just so you comply with the law. These strategies are generally so broad, that they never need updating, if the SMSF’s strategy actually changes. A typical IS might be made up of one quarter Cash, one quarter International Shares, and one half Australian Shares.
However, if you put some effort into it, your strategy can actually be the difference between a well performing SMSF and an outstanding performing SMSF. Many people have heard the saying Failing to Plan is Planning to Fail”!…well, this definitely rings true for SMSF’s. Your SMSF’s IS is what you refer back to whenever making investment decisions for your SMSF. The more detailed the plan you have, the better. And, just because you have a documented plan doesn’t mean you can’t change your strategy every now and then. or many people their investment strategy will change many times during the life of their SMSF, as the market conditions change, and their experience around investing grows. There were many Super Funds that changed their strategy recently during the global financial crisis. If they didn’t do this they may have ended up much worse off than they are now. To change your SMSF’s investment strategy you must follow a couple of steps:
- Meet with the other SMSF Trustees
- Agree on the changes
- Document the changes and submit them with your SMSF Audito