Investment Strategy for Self Managed Super 15/16

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Investment Strategy for Self Managed Super 15/16

Fully compliant with current Commonwealth legislation and includes a Minute for the Self Managed Superannuation Fund to adopt the Investment Strategy.

Self Managed Superannuation Fund ("SMSF") Investment Strategy

What is an Investment Strategy?

It is a strategy which is aimed at the investments of the SMSF to achieve a desired outcome and a minimum level of performance.

It is a plan for making, holding and realising the SMSF’s assets consistent with the Investment Objective of the SMSF.

As circumstances change over time, the investment strategy of your SMSF should be seen as a working document and should be reviewed, and updated (if required), at least annually. Your SMSF auditor will likely want to see that your SMSF’s investment strategy has been reviewed at some point during the year (which can be evidenced by way of a mention in the SMSF’s Minutes of Meeting). The document you are purchasing from Law Central provides you with a template investment strategy for a single SMSF that will allow you to re-print (for free) as and when required to update it as necessary.

Why does my SMSF need an Investment Strategy?

Under the Superannuation Industry (Supervision) Act 1993 (“SIS Act”) the Trustee of the SMSF is solely responsible and directly accountable for the management of the members’ benefits.

The trustee has a duty to make, carry out and document decisions about investing the assets of the SMSF and to carefully monitor their performance. This duty involves formulating and implementing an investment strategy. This important duty is prescribed in the SIS Act as a covenant (an obligation of the trustee).

The investment strategy must have regard to the whole of the circumstances of the SMSF, including:
1. the risk involved in making, holding and realising the SMSF's investments, and the likely return from these investments, having regard to the SMSF’s objectives and its expected cash flow requirements;
2. the composition of the SMSF's investments as a whole, including the extent to which the investments are diverse or involve the entity in being exposed to risks from insufficient diversification;
3. the liquidity of the entity's investments having regard to its expected cash flow requirements, for example: payment of tax, superannuation surcharge liability of the members, lump sum benefits if a member leaves the SMSF, or regular pension payments;
4. the ability of the SMSF to discharge its existing and prospective liabilities; and
5. whether the SMSF should consider holding a contract of insurance over any one or all of its members.
The purpose of this obligation is to make the Trustees think and consider the appropriateness of the investments undertaken by the SMSF with respect to the circumstances of its members and also the requirements of the SMSF at law.
Under this approach to managing the investments, the Trustee should implement a due diligence process promoting well thought-out and responsible decision making. This also protects the Trustee from action by members if the investments turn out to be disastrous.
WARNING
If you do not have a valid and complying "investment strategy" the ATO may determine that your SMSF is non-complying.
Checklist is not available for this document.
Sample is not available for this document.
This document has been prepared by Peter Bobbin (Argyle Lawyers)

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Investment Strategy for Self Managed Super 15/16

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