Income Artist

What Kind Of Assets Can Be Part Of A SMSF?

Author: Jimmy Barron
Published:March 21, 2023
4 mins 3 secs

In Australia, a self-managed super fund (SMSF) is a well-liked investment instrument that enables people to control and manage their retirement funds.

SMSFs give members more control and flexibility over their assets and are governed by the Australian Taxation Office (ATO).

The flexibility to invest in a variety of assets, which can offer diversification and possibly higher returns, is one of the primary benefits of SMSFs.

We shall examine the many asset categories that can make up an SMSF in this article.


Real estate, including residential, commercial, and industrial properties, is an investment option for SMSFs.

With rental revenue, real estate can offer a reliable source of income that may also increase in value over time.

Yet real estate investing can be risky as well and costs a substantial sum of money. Before investing in real estate, SMSFs must get an ATO compliant superfund property valuation report to ensure compliance with the law.

To make sure that the property is being purchased and held at market value in accordance with ATO requirements, SMSFs are required to provide this report.

Real estate investment trusts (REITs), which offer exposure to the real estate market without requiring actual property ownership, are another way that SMSFs can invest in real estate.

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Cah And Term Deposits

Cash and term deposits are regarded as low-risk assets that are frequently utilized to give retirees a consistent source of income.

They are frequently employed as a short-term investment plan or as a haven for money while awaiting other investment opportunities.

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The returns on these investments, however, are often modest when compared to those of other asset classes like stocks and real estate.

Australian Shares

For SMSFs, Australian shares are a popular asset class. To be prepared for the worst, it is wise to have a backup strategy.

Yet, investing in stocks can be dangerous because share prices can fluctuate and be influenced by the market.

To lessen the risk of severe losses in the case of a downturn in one specific sector, SMSFs should diversify their shareholdings across many companies and sectors.

Also, it is crucial to take into account the costs related to stock investments, such as recurring management fees and brokerage fees, which can affect the overall return on investment.

International Shares

SMSFs have the option to invest in foreign stocks, which can give them exposure to global markets and diversity.

Compared to Australian shares, international shares have the potential for bigger gains but also carry a higher level of risk.

The chance to invest in developing markets like China and India as well as exposure to multinational brands are some advantages of buying shares of foreign companies.

Managed Funds

Another common investing choice for SMSFs is managed funds. Managed funds combine the capital of many investors to make investments in a variety of different assets.

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Diversification and possibly higher profits can result from this. Shares, real estate, and fixed income are just a few of the many asset types that managed funds can invest in.

The option to invest in foreign markets, access to a wide variety of assets, and expert management are just a few advantages of investing in managed funds.

Fixed Income Investments

Moreover, fixed-income investments like corporate and governmental bonds are frequently owned by SMSFs.

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They provide a fixed rate of return and a relatively low-risk investment alternative.

Since they are backed by the government, government bonds are typically thought to be the safest type of fixed-income investment.

In contrast, corporate bonds are riskier but have the potential for higher yields.

It is crucial to keep in mind that the returns on fixed-income assets might not keep pace with inflation, which can gradually reduce the purchasing power of SMSF money.

Alternative Investments

As a strategy to diversify their portfolio and potentially produce higher returns, alternative assets like infrastructure, hedge funds, and private equity are gaining popularity among SMSFs.

In comparison to more conventional asset types like stocks and real estate, these investments frequently have greater minimum investment requirements and could be less liquid.

Alternative investments may be subject to less regulation and transparency than traditional asset classes, so it is crucial for SMSFs to thoroughly investigate and comprehend the risks involved before investing.

While these investments may have greater fees than other asset classes, this is another crucial factor to take into account.

An SMSF gives people the chance to exercise more control over their retirement funds and customize their investing strategy to their particular situation.

An SMSF has a variety of investment options at its disposal, from lower-risk cash and term deposits to riskier alternative assets.

The members of SMSF must carefully weigh the risks and expenses related to each investment option because greater power also comes with greater responsibility.

An SMSF can be a useful tool in guaranteeing a comfortable retirement with careful planning, diversification, and dedication to compliance.