If you decide to set-up your own Self-managed Super Fund (SMSF), the first thing you should think of is your investment strategy. Planning carefully on what to invest in is important in SMSF so your super would not be put to waste. But what makes one a good investment?
The best investment varies from person to person. It depends on your situation, capabilities, and financial goals. However, while there is a lot of investment you can think of, the SMSF limits what kind of investment it can acquire.
Read further to know what are allowable investments from an SMSF:
Property is the most popular investment among SMSF trustees. No wonder because property, whether residential or commercial, allow you to earn passive income in the long run. With your SMSF fund, you can invest in any type of property, for business or retirement plan, as long as allowed by the rules.
Your SMSF can also lend money so you could buy a property. To realize this borrowing, you need to coordinate with a Corporate trustee to set up a Bare Trust.
2. Share Related Investments
As soon as your SMSF is established, you can right away enter into a share trading account. This can be made through an online broker or with a traditional service broker. Moreover, another better “shares” related investment is the Separately Managed Accounts. This type of scheme has low transaction costs and caters to SMSF trustees without hassles.
When the SMSF is used to invest in shares, you need to consider your Diversified Share Portfolio, Dividend Payout, and Franking Credits.
3. Gold and Silver
Most SMSF trustees also invest in Bullion – gold and silver. However, this type of investment comes with stricter rules to be complied with. When the gold is considered collectible gold coins, it is not allowed to be stored at home, shown off, or lease to another party.
God and silver are good investments because, like property, they increase in value as time goes on. They are an excellent money-making investment because wherever you are and what type of economy you have, these stones don’t decrease in value.
4. Term deposit
A term deposit is also an income-generating investment. It has a higher rate of interest than the usual savings account. This type of investment is your “safe zone” considering that investing in property, shares, and so on is quite risky. This can be your low-risk option yet, at the same time, allow you to grow your SMSF.
The best investments depend on your financial objectives. The outcomes you wish to have is dependent on your lifestyle, age, and decisions you will make in the future. When investing, take note that the higher the risk, the greater the income; the lower the risk, the lesser your income would be.
You are certainly in control of your SMSF. However, it won’t hurt to ask for guidance when it comes to your investment. Ask a little help from your SMSF specialist about your investment plan and strategy.