SMSF’s are required to have an investment strategy however it’s probably fair to say that while most funds will attend to putting one in place that quite often once it’s in place that it hovers somewhere in the subconscious mind of the trustees.
An Investment strategy is an investor’s plan of attack to guide their investment decisions based on their goals and incorporating their risk tolerance and future needs for capital. The components of most investment strategies include asset allocation, buy, sell and risk guidelines.
In a public offer fund the member will be expected to choose a strategy generally based around their risk profile. These will have names like conservative, balanced, growth and aggressive and their names should conjure up a general idea of what investments you could expect to find included in each of them.
Investments strategies such as rapid growth will focus on capital appreciation and a safety strategy will focus on wealth protections.
It’s not hard to imagine that the phase of life the individual is at will most likely significantly influence the strategy chosen. For example a younger investor may feel they have the time and enthusiasm required to place their investments in a growth strategy while an individual closer to retirement or indeed in retirement will be more likely to choose the safe path as they are aware that the opportunity for recovery if everything heads south is more challenging coupled with of course their immediate need for the investments to support their lifestyle.
That’s why even though you may have something on paper it’s a good idea to actively review your investments either as the trustee of your superannuation fund or with your advisor on a regular basis.
If you need some advise on a SMSF investment strategy give me a call on 08 62672200 🙂
LIZ GIBBS – SMSF MANAGER