SMSF investment strategy
For centuries, gold has been the preferred way of accumulating and securing wealth—and with good reason. Unlike other investment instruments, gold is a relatively low-risk investment option, as it predictably appreciates in value over time.
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Nowadays, it is more common to see people managing their own super via self-managed super funds (SMSF) and developing an SMSF investment strategy. There are almost 600,000 SMSF in Australia with over one million members and with around $822 billion in assets. While this is not a huge amount of people overall, it’s about 25% of the entire amount of money invested in superannuation in Australia. If you are thinking of joining them, you may wonder what the best SMSF investment strategy to put into action is. Furthermore, if you are wondering where to buy gold and how to buy gold in Australia as a potential component of an SMSF investment strategy, check out the Rush Gold app and apply for our ebook for the SMSF investor.
How does an SMSF work?
As the name suggests, an SMSF is a super fund that a private investor manages. Instead of putting money into a super fund to invest on your behalf, it is up to you as the investor to manage your money yourself and also to choose your investments yourself. This means that as an SMSF investor, you have total control over how your money is invested. Therefore, an SMSF investment strategy is crucial to make sure that the fund yields good returns and meets your risk appetite.
There are some basic guidelines that outline how an SMSF works. An SMSF must have a certain structure and also rules of operation so that it works well and within the law. When establishing an SMSF, the number of members is limited, and all members are trustees of the fund responsible for running the SMSF. As trustees of the SMSF, all members must make sure that they are acting in the best interests of the fund and all its members when making any decisions, so any self-interest or conflict of interest must be avoided. Although trustees of an SMSF may get advice from or hire other professionals such as financial advisors or accountants, the ultimate responsibility and accountability for the fund will always lie with the members. The fund must also comply with the requirements of an Australian super fund. This includes preparing and implementing a written SMSF investment strategy which then must be regularly reviewed.
How is SMSF different from other super funds?
As already mentioned, the main difference between an SMSF and other super funds is that an SMSF is a private fund that you manage yourself. That means a big difference in where the responsibility for investing lies as well as legal obligations. Choosing and managing investments yourself also means that, compared to a standard super fund, the range of investments available may be wider. The options may range from property to unlisted shares to artwork, which are investments that may not be under the usual super fund investment umbrella. Naturally, the size is also different – an SMSF may have up to four members, usually family or friends. Another difference is that running an SMSF will also take up a lot more time than investing your super in a standard super fund.
What are some good SMSF investment strategies?
When setting up an SMSF investment strategy, it is important to have clear objectives and also to be clear about what types of investment the fund will take on to meet their investment goals. Another important thing to consider is risk insurance. One of the things that it would be wise to focus on when putting together an SMSF investment strategy, which is related to risk, is portfolio diversification. Careful and diverse asset allocation may help to minimise risk and maximise return.
At Rush Gold, we believe that gold is potentially amongst the best SMSF investments and adding gold via a digital platform can make it a simple way to invest for your future. Opening an account on our online app allows you to buy gold and sell gold easily so that you can add it to your SMSF portfolio with minimum hassle. You can also skip the security, transport and insurance costs as well as taking advantage of low capped transaction fees and no minimum purchase quantity. Furthermore, the app shows the current gold price in AUD and other currencies, so it is easy to track your investment and ensure it is working for you.
When planning your SMSF investment strategy, gold investing should be something you consider seriously for various reasons. Why invest in gold? It can be a great portfolio diversifier, meaning that it can counterbalance the activity of other assets in your portfolio and protect against systemic risk. For example, when the equities market moves, gold is likely to move in the opposite direction so that it can offset the risk of equities. Gold is also scarce and shows great liquidity, especially when compared to property investment, for example. The demand for gold is also increasing – especially in countries such as China and India. Finally, in a low-interest rate environment, gold is likely to provide a better return than bonds or cash.
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