Once you have established your Self-Managed Super Fund (SMSF), you really need to consider how to manage your funds investment. This is one of your key responsibilities as a trustee. Here are some simple things to keep in mind when managing your funds investment.
Your investment strategy
It’s recommended you have a written investment strategy and invest according to this strategy. This sets out your investment objectives and how you will go about achieving them. Regularly reviewing your investment strategy will help you maintain the right mix of investments and keep up to date with any updates that may affect your investment strategy.
Restrictions on investment
A SMSF trustee has flexibility in what they want to invest in but there are some restrictions on how you can invest and what you can invest in. Make your investments on a commercial ‘arm’s length’ basis and don’t buy assets from or lend money to fund members (or other related parties). Generally, you can’t borrow money.
Ownership and protection of assets
As a SMSF trustee you must manage your fund’s investment separately from the personal or business investments of members, including your own. This includes ensuring the fund has clear ownership of its investment assets.
The fund’s investments are for the sole purpose of providing retirement benefits to members. This means that there cannot be any pre-retirement benefits to members or related parties (such as letting members use an investment asset). If anyone in your fund obtains financial benefit when making investment decisions (other than increasing the return to your fund), it’s likely your fund will not meet the sole purpose test.
Investing in collectables and personal-use assets
All collectibles and personal-use assets purchased by SMSFs have to comply with tightened rules. These rules are in place to ensure investments are made for retirement purposes and do not provide any present day benefit. If you don’t comply with these rules you may face severe penalties.
If you would like some more information on managing your fund’s investment, please don’t hesitate to get in touch with the team here at Fortis Accounting Partners/Fortis Financial Planning. We have knowledgeable and experienced accountants and financial planners on staff to assist with any queries you may have. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
