I have questions about the Investment Strategy?
Does an SMSF need an Investment Strategy?
Yes, the covenants within section 52B of the SIS Act (super laws) requires that the trustee(s) of a SMSF to have an investment strategy. This sets out the fund’s objectives and specifies the type of investments that the fund can make.
What is an Investment Strategy?
The investment strategy should be writing and must be regularly reviewed to ensure that it continues to reflect the purpose and circumstances of the fund and its members. Any decisions made and reviewed by the trustees should be documented and maintained for a minimum of 10 years in accordance with the record keeping requirements.
When preparing and reviewing an investment strategy, the trustees must take into account the personal circumstances of all the fund members, including their age and risk tolerance. Super laws require that the trustee(s) consider:
- diversification (investing in a range of assets and asset classes)
- the liquidity of the fund’s assets (how easily they can be converted to cash to meet fund expenses)
- the fund’s ability to pay benefits (when members retire) and other costs it incurs
- the members’ needs and circumstances (for example, their age and retirement needs).
In addition, the trustees must consider whether to hold insurance cover (such as life insurance) for one or more members of the fund.
What documents does Smarter SMSF produce for the Investment Strategy?
Following completion of the order, the following documents will be generated as part of the completed order:
- Investment Strategy Report; and
- Trustee minute accepting and adopting the updated investment strategy
More questions, please visit our site: https://smartersmsf.com/documents/investment-strategy/#1537622235197-61900eb7-4204