9 Ways You Can Invest Using SMSF
Review nine smart ways to invest using an SMSF, from property and international shares to cryptocurrency and managed funds. Maximise your retirement savings wisely.
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1. Property
As an SMSF member, you can purchase property as an investment. You might want to consider sprucing it up a bit by hiring a decorator, designer or contractor to remodel it as well. However, The SMSF has strict rules regarding members who buy properties. For instance, the member can’t use the property as a home.
2. You can invest in international markets
Don’t think that you have to keep your money on Australian soil because you have the option of investing in international markets. This means you can invest your SMSF funds in real estate, foreign bonds, or even shares all across the globe.
3. To hold cash in savings
You can also use your SMSF to hold capital in savings or to provide liquidity. Generally, this strategy is used when the market is volatile as a way to defend your finances.
4. Term deposits
Term deposits are a secure, low-risk investment option. When you use a term deposit, you’re fixing your cash into a fixed time period with an interest rate that’ll guarantee a certain return when the period is over. While the returns for this investment option might be slower, it is a more stable strategy.
5. Invest in company shares
Another great option is to invest in shares. With an SMSF, you can choose whether you want to invest in private company shares or international shares. This allows you to diversify your investment portfolio with a wide range of options.
6. Physical commodities
You can use your SMSF to invest in things like silver, gold, or other valuable materials. Remember, though, that while these items can offer you a degree of protection against inflation, their values can be volatile, which makes them riskier investments.
7. Personal items
In some cases, you can also use your SMSF to invest in personal items. But these need to be items of value, like artwork, jewellery, or wine. However, these items cannot be used by the main member of the SMSF.
8. Managed Funds
Managed funds incorporate pooling your investments in with other investors, giving you more exposure and access to assets managed by professionals. It’s a great way to limit your risk but might not have the same rewards.
9. Cryptocurrency
Cryptocurrencies like Bitcoin and Ethereum have become popular investments, and you can use your SMSF to invest in ones of your choice. Be warned: the crypto world is extremely volatile.
The ideal SMSF investment strategy to follow
Here’s a good strategy to follow to help you get started:
- Consider your risks. This includes the level of risk and how you’ll mitigate them
- Look at the liquidity of your assets. Basically, your assets should be easy to convert into cash
- Check whether you need any insurance for your assets or not
- Consider what benefits the fund will give you
- Invest in a range of different assets
- Consider your retirement age and other personal circumstances
Remember, while a SMSF gives you flexibility, it should be aimed towards saving for your retirement. Keep this in mind while drafting your strategy.
Final Thoughts
A self-managed super fund is great for individuals who want to be more hands-on when investing in their future and building generational wealth. Your success will largely depend on the investment strategy you choose, so if you are unsure of how to invest, contact an investment advisor for some guidance.
Promoted by Solace Financial
October 10 2024
smsfadviser.com
