Before you start making investments you must have an investment strategy. This sets out your fund’s investment objectives and specifies the types of investments your fund can make. Your investment strategy should be in writing and must:
- Be reviewed regularly to ensure it continues to reflect the purpose and circumstances of your fund and its members (your review and any decisions made should be documented)
- Consider whether to hold insurance cover (such as life insurance) for each member of your SMSF.
When preparing and reviewing your investment strategy, take into account the personal circumstances of all the fund members, including their age and risk tolerance. You need to 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).
You may also want to consider Insurance for Members.