Building Your SMSF Investment Strategy: Mastering Self Managed Super Funds Rules

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August 25, 2025

One of the biggest reasons Australians choose SMSFs is the power to control investments. But with that freedom comes the need to follow self managed super funds rules carefully, especially around how you invest and manage risks.

This guide will help you develop a compliant, effective investment strategy for your fund.

Why Your Investment Strategy Must Follow SMSF Rules

The ATO requires all trustees to document an investment strategy reflecting:

– Members’ profiles
– Risk and the likely return from your fund’s investments
– Diversification and the risks of inadequate diversification
– Liquidity, ease to meet fund expenses, taxation and pay member benefits
– Insurance considerations, including personal insurances and insurance over assets

Failing to follow self managed super funds rules around investment planning can result in compliance breaches.

Diversification and Risk Management

SMSFs give you options to build a diversified portfolio, including:

✔ Direct property
✔ Australian and international shares
✔ Managed funds
✔ Cash and fixed interest
✔ Collectibles

Diversifying helps spread risk and ensures your fund meets liquidity requirements.

Self Managed Super Funds Rules on Investments

Important compliance areas include:

✔ Arm’s Length Transactions:
All investments must be made on a commercial basis.

✔ In-House Assets:
Investments in related parties are limited to 5% of total assets.

✔ Borrowing Restrictions:
SMSFs generally can’t borrow, except under strict limited recourse borrowing arrangements.

Following these self managed super funds rules protects your fund’s compliance status and tax concessions.

Tax Considerations

SMSFs enjoy concessional tax treatment when they follow the rules:

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Income taxed at 15%

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Long-term capital gains taxed effectively at 10%

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Pension phase income often tax-free

Mistakes with contributions or non-compliant investments can trigger higher tax rates.

Creating and Reviewing Your Strategy

A robust investment strategy is a legal requirement and a smart step to grow your retirement savings. Review it annually or whenever circumstances change.

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Download Your SMSF Checklist

Building wealth with an SMSF starts with understanding self managed super funds rules and crafting a clear plan.

Download our SMSF Checklist to start designing your strategy—or speak to an adviser today for personalised support.