7 Options to Invest for a SMSF

Whether you are looking at your SMSF options for investing or are just curious about SMSFs in general, these are some of the things you will need to know.

One of the biggest benefits of a SMSF is that you have the power to make individual decisions based on your own investment strategy. However, there are rules to keep in mind.

General Rules and Obligations

1. Act in the best interests of the members in the Fund to meet retirement needs.

2. Make investments in commercial terms, i.e., investments must be bought and sold at market value.

3. Not following the rules can carry severe penalties. (Check ‘The Most Common Broken Rules by SMSF Trustees’).

As a SMSF trustee, investment are to be made for the ‘sole purpose’ of the fund and its’ members, to provide for retirement. Anyone associated with the fund, whether it is a member, relative or associate of a member are to be at ‘arm’s length’, i.e., must not gain an immediate benefit through or from the fund. A good example would be if you owned a rental property, let’s say a holiday home, through your SMSF. The ‘arm’s length rule’ states that members of the fund or their relatives cannot rent that property even if paying market value.

So let’s get to the point. What can your SMSF invest in?

Investments for an SMSF including but not restricted to:

Major Investments

1. Real Estate

a. Residential (but not your own house).

b. Commercial

c. Industrial

d. Limited Recourse Borrowing Arrangement (LRBA) (Check ‘Borrowing for a SMSF Property’)

Major to Minor Investments


a. Listed Australian

b. Private Companies (non-member related)

c. Foreign shares

d. Forex (Foreign currency exchange)

3. Cash management accounts

4. Term deposits

5. Alternative investments (business related items that you can purchase for hire or get returns from such as an ATM, for example)

6. Collectables (there are very strict rules but you can do it) (Check ‘Rules Relating to Collectables’)

So you might be thinking, what are some of the restrictions and limitations?

These are just some of them.

1. Your SMSF cannot lend funds to members or their relatives.

2. You cannot use the funds for personal use, i.e., buy fuel, etc.

3. You cannot purchase your own home or any related person’s property.

4. You cannot purchase assets from related or associated third parties.

5. The fund has a limited 5% loan capacity which at all times throughout the life of the fund cannot exceed 5%.

6. You cannot borrow on behalf of the fund except in very limited circumstances.

7. You cannot use your fund as security for personal borrowing.


This article was created as general information only and not to be considered complete or advice. Individual circumstances and financial needs vary from person to person and the intent is to provide an overview of the considerations concerning SMSFs or investors. Links to other sites do not constitute endorsement or accuracy of the information contained within the referenced website.

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