Financial Advisers Ballarat: SMSF Investment Options & Pitfalls

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Make the most out of your SMSF investments and avoid some common pitfalls of SMSF investors. One of the advantages of a self-managed super fund is the wide range of investment options available. You can invest your money where you want to and tailor your investments to your interests. However, you still need to invest wisely even if your SMSF investment options seem to be endless. At Sky Accountants Ballarat & Financial Advisers Ballarat, our goal is to empower you to become a better, more finance-focused and well-rounded individual or entrepreneur. Contact us at info@skyacc.com.au or 1300 328 855

You need to determine your overall goal to set up good long term investments in your SMSF. Ask yourself what you are trying to achieve.

If you want your superannuation to provide for your retirement, your investments should reflect this. Find out what investments should be in your SMSF by working out the kind of life you want in your retirement. Find out how you want to live, if you want to take regular holidays and how much you would like to spend each year.

Most people find it hard to reduce the quality of life they had while working by the time they retire. You have worked so hard to reach retirement and it makes sense that you want to enjoy it. Your SMSF investment goal should be an equal replacement of your after-tax work income with your SMSF income. Find out how much you need right now to live each year.

Once you find out how much income you need per year, you need to do some financial modelling to determine the types of investments that will help you achieve it over the long term. A financial planner may help you with this.

At Sky Accountants Ballarat & Financial Advisers Ballarat, our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at info@skyacc.com.au or 1300 328 855

Asset allocation is very important because you need to find out which assets are best for your situation. It could be growth assets such as Australian shares, International shares, unlisted investments or property. It may also be defensive assets like term deposits, fixed interest or cash. You can reduce the risk by having a diversified portfolio.

You shouldn’t focus solely on achieving the highest return possible because while it can be successful, it also comes with a higher risk for low returns. The risk can be unstable and dangerous to the future of your personal wealth.

You should determine your risk appetite. You would want to get the level of return that can help you achieve your goals with the least amount of risk. If your risk appetite is low, the types of investments you can make are cash, term deposits and interest securities. If it is medium, you can invest on blue chip shares, property, hybrid securities and balanced managed funds. If it is high, commodities, currencies, hedge funds and private equity are the types of investments for you. The tax structure of an SMSF should also be considered when looking at investments. International investments and property do not have franking credits as opposed to fully franked dividends.

At Sky Accountants Ballarat & Financial Advisers Ballarat, our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at info@skyacc.com.au or 1300 328 855

It is important to avoid making investments based on tips from friends. Some people don’t like to invest in shares because of a bad experience and may have received a tip from a friend that went bad so they reject the whole market. It is critical that you get advice that’s customised to your situation so you can choose investments that fit your objectives.

People would try to get the biggest return but it’s not always necessary to take on that level of risk. If you do some financial modelling, you may find that you need only 5% return every year for the next 10 years. If you don’t do this, you might try to get 15% returns on risky investments and end up quickly losing money instead of gradually achieving your goals. If you only need 5% returns to achieve your desired lifestyle, the risk of chasing higher returns is just not worth it.

You should also avoid investing on new investment schemes that provide tax breaks. If you focus on investing to reduce your tax instead of the underlying investment, you can make poor investments. We also discourage investing in collectables because there’s currently no guaranteed investment in the market and selling these can be difficult because of the lack of buyers. You need to have in-depth knowledge of the collectable market if you want to turn your passion into an investment.

Before investing, find out if you are comfortable holding the investment for the long term as investments can decrease in value over the short term. If you don’t understand the investment, you might sell it as it decreases in value. Determine if the investment matches your objectives and if it can produce returns that will help you achieve your goals. If not, it may be time to re-evaluate.

Investing in an SMSF is a long term so know what you want to achieve, construct your portfolio based on it and avoid just choosing what’s currently hot.

Sky Wealth – Financial Advisers Ballarat

As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.

You can click here to speak to a businessaccounting and bookkeeping firm. We also offer hospitality business consultation and mortgage services. We will give you a call to know more about your needs. We will explain to you how we can improve your business.

We would love to help you formulate investment strategies and streamline your processes to take your business to the next level.  Our goal is to help you grow your business, find ways to invest more and increase your productivity.

Here are two other ways we help business owners grow their business:

  1. Take our free online assessment and see how much your business is currently worth (free 30page detailed report included)
  2. If you are looking to change Accountants or need advice on how to grow your business, organise a 1on1 session with a Sky Business Expert here

Email Address: info@skyacc.com.au

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