Consider these investment options for your SMSF
There’s a lot of differences in SMSF’s, particularly when it comes to investment goals; we all have different goals and plan to use our super in different ways. So here’s three important considerations when deciding on how and what to invest in with your Self Managed Super Fund.
1: Capital Growth
Capital growth, put simply, is an increase in the market value of an investment over time. If your goal is for a long-term investment, or putting money aside as an inheritance for future generations, then capital gains will be a key focus for you.
- Pros: growth assets typically provide a higher return than defensive assets (ie. Cash).
- Cons: Investors need to be prepared and mindful or the risks that come with growth assets (eg. higher volatility and potentially capital loss).
2: Income assets
If you’re investing to receive a stable income or regular payments, for instance to support lifestyle expenses with your super, then income assets would be a type of investment you might consider – think real estate or stocks.
- Pros: Income assets offer a steady cash flow and are important to diversification strategies.
- Cons: Income assets have little or no growth.
3: Preservation of Capital
In a post-covid world, SMSF investors will be placing a premium on preserving their capital; for some investors, protecting their hard-earned savings will be their primary goal. This choice of investment is important for retirees who rely on their SMSF for living expenses.
- Pros: Lower risk.
- Cons: Lower returns.
Summary
Setting up your Self Managed Super Fund (SMSF) needs to be right for you and your individual circumstances. Consider your current and future plans when deciding where and how to invest your hard-earned money.
DISCLAIMER: This information is to be used as a guide paired with professional advice and contains general information only. This is not determinate of personal circumstances. No responsibility can be accepted for any action taken as a result of the information in this article. This information is not designed to replace professional advice.
If you need professional assistance in relation to your SMSF, please contact our friendly accountants on (07) 5444 1022.