SMSF investment options

Take control of your superannuation investments

Establishing a self managed super fund (SMSF) places you in control of your superannuation investments. To invest successfully, you must determine your goals and pick effective and appropriate investments to help you achieve them. A key SMSF investment advantage is the ability to build a portfolio reflecting your current lifestyle needs, short and long-term goals, changing circumstances and market conditions.

What are your SMSF investment options?

With an SMSF, you can choose to invest in a broad range of asset classes, including:

  • Australian and international shares (listed and unlisted)
  • residential or commercial property
  • cash and term deposits
  • fixed income products
  • physical commodities
  • property
  • collectables.

Diversifying your portfolio 

Changing market conditions may, at some point, require you to consider investment options for your SMSF outside traditional asset classes such as cash or shares.

By diversifying your portfolio, it may help manage risk to sustain your income as you move closer to retirement. A few alternative assets to consider under advice include:

  • corporate bonds – generally provide a higher yield than cash, and they are also typically less volatile than shares
  • commercial real estate – may offer a higher yield and more predictable cash flows than residential property; rents are often linked to inflation, which may help to preserve real income levels
  • infrastructure – generally offers predictable, long-term income streams secured through contractual obligations, monopolistic status or regulation; the defensive nature of these cash flows, in addition to real asset backing, can provide support in uncertain economic environments.

However, it’s not always easy to access these types of investments without specialist knowledge and all investments have its own risks . You should seek advice if you’re considering changing your investment strategy. The point to note is that when it comes to investment options for your SMSF, there are viable alternatives to cash and shares, which you may not have yet considered.

Three steps to SMSF investing

Although every SMSF trustee will have different investment goals, these three areas are important to factor into your investment considerations:

1. Capital growth: building wealth

Capital growth is an increase in the market value of an investment over time. This area is important if you are seeking long-term investments, or if you are managing your life savings as an inheritance asset for future generations. Growth assets typically provide a higher return than defensive assets (like cash), but investors must be prepared to experience higher volatility and potential capital loss.

2. Income generation: earning regular payments

Investing for income involves assets that provide stable income or regular payments (such as interest or dividends). This is important if you are funding lifestyle expenses with your super and investment returns. Income assets typically have little or no growth, but offer a steady cash flow and are important to diversification strategies.

3. Capital preservation: managing risk

For some investors, protecting their hard-earned savings is the primary goal and therefore they are satisfied with lower returns in exchange for lower risk options (like bonds and term deposits). Preservation of capital is important for retirees who rely on their SMSF for living expenses, or have limited time to recover from market losses. 

Experience investment control and flexibility

Retail and industry fund trustees make decisions to benefit all members, but with an SMSF you can choose where, when and how much to invest. This provides you with greater control and flexibility. SMSFs also provide a high level of transparency, allowing for deliberate exposure to certain industries, asset classes or ethical investing opportunities.

Discover if self managed super is right for you*

Find out how we can help you achieve your retirement goals by talking to one of our SMSF directors.