Navigating the journey of a self-managed superannuation fund (SMSF) can seem a bit intimidating at first.
There’s a lot to consider – from aligning the investment strategy with your financial objectives to the daily management of the fund. Here’s our three-point guide to making your SMSF work effectively for you.
Tip 1: leverage cutting-edge technology
Traditionally, managing SMSFs was a complex and time-consuming task, riddled with the potential for costly errors. But those days are behind us.
Modern, easy-to-use platforms like Class, BGL and SuperMate have significantly simplified fund management. They provide a streamlined interface for administrators or accountants to manage your fund more efficiently.
By adopting SMSF administration platforms and online investment management technology like Stockspot, you’ll not only simplify your fund’s administration but also gain daily insights into your investments. You can track their performance and returns, making it easy to keep an eye on how your money is working for you.
This level of transparency and ease is what sets SMSFs managed through Stockspot apart from traditional retail super funds.
Tip 2: adopt a strategy of diversification
In the past, many SMSFs had a narrow focus, with assets predominantly held in cash, term deposits, or property. However, this approach has evolved significantly. At Stockspot, we emphasise the importance of diversification to our clients. Diversification means spreading your investments across a variety of assets to minimise risk. We recommend the use of low-cost index funds, like ETFs (exchange traded funds).
ETFs allow you to spread your investments across a broad range of asset classes – from global shares and fixed interest bonds to inflation-linked bonds and commodities. This approach safeguards your portfolio, minimising the potential for significant losses during periods of market volatility and the inevitable downturn.
“One of the primary appeals of SMSFs is the level of control they provide over investments.
Tip 3: tap into the power of flexibility
One of the primary appeals of SMSFs is the level of control they provide over investments. This control allows investors to include a wide range of assets they’re passionate about or have significant knowledge in. You could opt for investment properties, collectibles, or even cryptocurrencies.
However, with this flexibility comes responsibility. It’s crucial to strike a balance and avoid exposing a large percentage of your SMSF to high-risk investments.
Above all, you should maintain a prudent approach to risk management, ensuring your investment decisions align seamlessly with your SMSF’s overall strategy.
It’s crucial to routinely review and align your investment strategy with your financial goals and risk tolerance. This is something that we do at Stockspot as part of our service for our clients.
