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September 28, 2023

What can SMSFs invest in? Consider Investment with Strategy and Methods

Katya Richardson

Written by Katya Richardson

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What can SMSF invest in? Consider Investment with Strategy and Methods

Many Australians are now actively managing their retirement funds with a self-managed super fund (SMSF). Why? because SMSFs offer more freedom and investment choices for a wider variety of assets compared to regular superannuation funds.

Indeed, along with the freedom and flexibility SMSFs offer comes a crucial inquiry: What are the permissible investment options for an SMSF? In this comprehensive article, we delve into the spectrum of investment choices available to SMSFs.

We explore the considerations essential to prudent investing, delve into crafting an effective SMSF investment strategy, and provide insights into the process of formulating such a strategy. Your quest for a detailed understanding of SMSF investment possibilities begins right here.

Assets SMSF

7 Types of Assets that SMSF Can Invest

Here is a list of the different types of investments that a self-managed super fund may make:

1. Residential and Commercial Property

While investing in real estate through your SMSF is a viable option, it’s imperative to acquaint yourself with the rules, as these rules diverge significantly from the conventions of regular superannuation funds. Usual rules that apply to regular superannuation funds:

  • You cannot buy a house through your SMSF from a family member or someone related to a member of the SMSF, nor can it be used as a residence by any SMSF member, including renting it out to them.
  • Through your self-managed super fund, you can buy your business property. However, you must pay rent to your SMSF at a rate that is consistent with the prevailing market rent for similar properties in the same area.
SMSF Property Investment

Lenders often allow self-managed super funds to borrow 70-80% of a property’s value. However, they typically require the SMSF to have a company as trustee instead of individuals.

2. Australian and international shares

Shares, also known as stocks or equities, represent ownership in a company. When you purchase shares of a company, you essentially become a shareholder and own a portion of that company. Shareholders have the potential to benefit from the company’s profits and growth.

According to the Australian Taxation Office (ATO), listed shares are the most popular asset class for SMSFs. Putting money into the stock market can be highly profitable, but it’s crucial to conduct your due diligence.

Investing in Shares with Your SMSF:

Many SMSF trustees invest in shares because they can grow in value and pay you dividends (like interest on your investment).

Here’s how it usually works:

  • Choosing Stocks: You get to pick which companies to invest in. You can choose Australian or international companies based on your plan.
  • Getting Dividends: Some companies pay you a portion of their profits as dividends. This will gives you a regular income.
  • Value Growth: Sometimes, the shares you own can become more valuable over time. When you sell them, you can make a profit.

What to Think About:

  • Risk: Shares can go up and down in value, so there’s some risk involved.
  • Research: It’s smart to learn about the companies first before you’re investing in it.
  • Tax Rules: Know the tax rules for shares in your SMSF.

3. Term deposits and cash

You can invest a portion of your superannuation balance in a term deposit for a certain amount of time at a specified rate of return. The majority of banks provide term deposits designed exclusively for self-managed super funds.

As long as you don’t take your money out of the account before the term is over, this low-risk technique enables you to earn higher interest than the majority of savings accounts. However, for money that is immediately available, a high-interest savings account is still helpful.

4. Fixed-income products

One popular form of fixed-income product is bonds, which are often less volatile than stocks.

When you purchase a bond, you are actually lending money to the company issuing it. This company guarantees to pay interest at a specific rate and to refund the principal on the bond’s maturity date.

Government bonds, which are thought to be the safer investment because the likelihood of default is low, are available on the bond market alongside business bonds.

5. Real goods

This category of “real” assets includes a variety of raw resources, including metals like gold and silver as well as agricultural and energy products.

The independence of commodities’ returns from those of stocks, real estate, and bonds attracts investors. Commodities can also be used as an inflation hedge because they are one of the few asset groups that perform well when inflation is rising.

6. Collectables

These include things like jewels, antiques, automobiles, coins, memorabilia, and wine. But after 2016, stricter regulations were implemented, and now fewer SMSFs are making collectibles investments. Before including any collectibles in your portfolio, be sure you are aware of the rules.

7. Crypto Mining Investment 

As technology advances, many people are entering the world of crypto mining via their Self Managed Super Funds. This novel strategy not only provides a unique way to diversify one’s portfolio, but it also allows individuals to tap into the possibilities of an exponentially growing digital economy. 

Crypto mining could be the thrilling business opportunity you’ve been looking for, if you’ve ever thought about diversifying your SMSF assets. Many people are already profiting from it, and they are using technology to its fullest potential.


Things To Consider When Investing

  • The assets of the SMSF should be kept apart from the members’ individual holdings.
  • Any asset’s investment should be in line with its market worth.
  • Transactions should be conducted at arm’s length, meaning that both the buyer and the seller act independently and impartially.
  • The assets shouldn’t be used to help the members or their family members financially.
  • The SIS Act should be followed, and the investment’s main goal should be to provide members with retirement benefits.

Investment Strategy for SMSF

Your SMSF’s investing strategy should achieve both your retirement and investment goals.

  • The plan needs to be documented and stored securely.
  • It should consider the following:
    • Risks: The level of risk, asset mix, and reasons for diversification should all be considered.
    • Asset liquidity: To ensure that the fund’s expenses can be covered, the assets should be easily converted into cash.
    • Insurance: Consider whether you need to offer your member’s insurance coverage or not.
    • Benefits: The fund’s capacity to provide benefits to its members.
    • Diversification: By investing in a variety of assets, one can protect one’s members from risk and volatility.
      The members’ individual
    • circumstances: such as age, employment status, and retirement requirements.
  • Every year, the investment plan should be evaluated. All investment-related decisions must be in writing and delivered to your SMSF auditor.
  • Every time the fund’s structure changes, the strategy should be evaluated. As in the case of a new member.
Investment Strategy SMSF

How to develop the investment strategy for your SMSF

  1. Before you establish an investment strategy consider the following:
    • Risks
    • Personal
    • circumstances of the members
    • Liquidity of the assets
    • How does it meet your retirement goals, investment strategy, and goals?
  2. Set the objectives for the investment and review it annually.
  3. Minimise your risk by diversifying your assets.
  4. Comply with the super laws as ultimately it is your responsibility to manage your SMSF.


In the world of self-managed super funds and their investment choices, knowledge and careful planning are vital. As you explore various investment options for your SMSF, remember that a well-thought-out strategy, regular assessment, and compliance with legal obligations are essential for achieving your retirement objectives.

Whether you’re considering traditional investments or newer opportunities like cryptocurrency mining, staying informed and making informed decisions will empower you to maximize the potential of your SMSF, securing a better financial future for you and your family.

The information presented on this website is general information only. It should not be taken as constituting professional advice from the website owner – Hiddup PTY LTD (Hiddup). Any information regarding past performance and returns contained on this website should not be construed or interpreted as a prediction or opinion as to future performance and returns. Hiddup is not a financial adviser. All views and observations expressed by Hiddup on this website are for information purposes only, are general in nature and should not be treated as investment or financial advice of any kind.