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With the recent updates brought about by the Australian Taxation Office (ATO), individuals have been urged to rework their personal bookkeeping practices to accommodate new rules and opportunities.

If you’ve been working on your financial obligations for quite some time now, you’ve most likely come across the new tax regulations. Spanning from allowances to deductions, the recently-announced ATO updates cover ground that everyone should be conscious of.

Mandates on investment strategies concerning self-managed super fund (SMSF) compliance are an especially hot topic today. Like many other Australians, chances are you have two main questions in mind regarding the concept in question:

First: “What exactly is an investment strategy?

And second: “Why do I need to prepare one?

The answers to these questions are essential for your fiscal growth and strategies for tax filing. Fortunately, we’ve prepared this guide on all that you need to know about investment strategies for SMSF compliance.

What’s an Investment Strategy?

Before discussing what your business can do to make the most out of an investment strategy, it’s crucial to understand what it is. Here’s a formal definition courtesy of the Australian Taxation Office itself: 

Your investment strategy is your plan for making, holding, and realising assets consistent with your investment objectives and retirement goals. It should set out why and how you’ve chosen to invest your retirement benefits, in order to meet these goals.

Why Do You Need to Prepare Investment Strategies?

When you look at the concept of SMSFs and understand how they work, you may wonder why they are vital for tax planning. Yet again, the ATO lays out the perfect answer so that you don’t have to lose sight of crucial details: 

The superannuation laws require that you must prepare and implement an investment strategy for your self-managed super fund (SMSF) which you must then give effect to and review regularly.

According to the guidelines of the SMSF, you are required to have a plan—and when your objectives change, you are required to make a new plan. With the given explanation, you can expect that investment plans for SMSFs will continue to be a key focus in the future.

What Are the Elements of an Investment Strategy?

When creating an investment strategy for an SMSF so as to comply with ATO guidelines and take control of your finances, there are several key elements that your document or plan should include. 

  • A consideration of (1) member ages, (2) anticipated retirement dates, and (3) how their benefits will be paid
  • The risks of buying, holding, and selling fund assets
  • The composition of fund assets, including considerations for diversification (or lack thereof) and how that meets the fund’s needs
  • A consideration of how the fund will convert assets to cash to pay its tax liabilities and other fees
  • Ability to pay benefits when a member retires (through lump sum or regular pension payments)
  • Insurance for each member

Beyond including these details mentioned, it’s crucial to enlist the services of a finance professional. Fortunately, this is where an expert like Wealthy You can come in and help you build the best investment strategy possible so that you take the right steps moving forward! 

Conclusion

Keeping your finances on track is difficult enough, and getting matters done right with the investment strategy for your SMSF is a completely different story. Fortunately, the key points mentioned above will make matters easier and ensure that you adhere to current tax standards!  

Are you looking to capitalise on the advantages of self-managed super funds in Sydney with the help of a professional financial advisor? We've got you covered. Get in touch with Wealthy You today!

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