A self-managed super fund (SMSF) is a private super fund that you manage yourself. It allows you to control your retirement savings and decide how to use them.
SMSFs present an exciting opportunity for Australians who want to take control of their retirement savings. In particular, the option to apply for a self-managed super fund loan in order to invest in property is a path to build your retirement fund and secure your future.
The best SMSF investments combine growth, diversification and reliable income to support your retirement goals. They typically include shares, property, ETFs, cash and other financial assets in a portfolio designed to match your risk profile and your goals.The popularity of SMSFs is growing. Recent government figures show that the number of new funds is growing each year to reach almost 650,000, and the value of assets held in SMSFs has topped $1 trillion.
Why? Well, the key benefit of SMSFs is that you’re in control. They give you the freedom to construct an investment portfolio that is as unique as you are.
Let’s take a look at what you need to know before starting one. In this article, I’ll cover:
- What is an SMSF?
- Is an SMSF right for you?
- The top 8 SMSF investment options
- How do you choose the assets for your SMSF?
- How to choose the right investments for your SMSF
- SMSF investment restrictions you should be aware of
- 6 strategies to grow your SMSF
- Common SMSF investment mistakes to avoid
What is an SMSF?
To put it simply, a self-managed super fund (SMSF) is a vehicle for saving for retirement. However, the clue to what really makes an SMSF different from traditional superannuation funds is in the name: self-managed. Sometimes known as “DIY super”, an SMSF gives members direct control over how their retirement savings are invested.
Setting up an SMSF – the basics
The first step is creating a legal superannuation structure and registering it with the ATO. Typically, you establish an SMSF trust and appoint up to six trustees. A trustee is the person responsible for managing the fund and making sure it complies with all superannuation regulations.
You then create a trust deed, get an ABN and TFN for the fund, open a dedicated bank account, and prepare a strategy document that outlines how the fund will invest. It should take one to four weeks.
Is an SMSF right for you?
Like all investment vehicles, there are pros and cons to starting an SMSF. As mentioned, the primary reason many people choose an SMSF is the control you have over where your money goes. You can choose an asset allocation strategy that meets your personal risk tolerance, financial goals and ethics.After all, because you control your SMSF investment strategy, you know exactly what you’re investing in. With a traditional superannuation fund, the underlying investments are often less transparent. You don’t always have the option to avoid funding, say, mining companies, even if you’d prefer not to.An SMSF does require a more active approach to your retirement fund. You will need to spend time running the fund, reporting to the ATO, reviewing the investment strategy, and staying across all the legislative requirements for running an SMSF. It’s not too onerous, but it is necessary – there are penalties for failing to comply or report correctly.
Here’s more on the pros and cons of SMSFs.
Put simply, if you value the flexibility to choose where your money is invested and are willing to devote a little time to staying across the reporting and legislative requirements, an SMSF could be an ideal growth strategy to fund your retirement.
The top 8 SMSF investment options
Once you’ve decided to start an SMSF, the next key decision will be what you invest in. This is part of your published investing strategy and will reflect your goals, circumstances and risk tolerance. The good news is that SMSFs can invest in lots of different assets. Let’s take a look at some of the best.
The Top 8 SMSF Investments
| Investment | Examples | Risk | Reward |
| Property | Houses, apartments, commercial premises | Medium (market fluctuation, interest rates on loans) | Capital growth and rental income |
| Shares | Stocks of individual companies | Medium (price fluctuation) | Dividends and capital gains |
| ETFs | Index funds tracking share markets (e.g. ASX 200) | Medium (market risk but diversified) | Dividends and capital gains |
| Cash and term deposits | Savings accounts, bank deposits | Low | Interest, liquidity to service SMSF liabilities |
| Collectables and personal use assets | Art, antiques, vintage cars, wine | Medium (value fluctuation) | Potential capital gain |
| Commodities | Gold, silver | Medium (price fluctuation) | Potential price gains |
| Cryptocurrencies | Bitcoin, Ethereum | Very high (extreme volatility) | Potentially very high gains |
| Trusts | Unit trusts, family trusts | Medium (depends on the assets held) | Income distributions and growth |
Property
What it is: Residential houses and apartments and commercial property in Australia and overseas.
How to invest: Your SMSF can invest in property outright if it has sufficient funds. It can also use a limited recourse borrowing arrangement (LRBA) to secure a loan for the purchase. An LRBA allows an SMSF to borrow money to purchase a property while limiting the lender’s claim to that asset.Here’s more on the process of buying property for your SMSF.
Who it’s for: Property is an ideal SMSF investment if you want a tangible asset in your portfolio and are looking for capital appreciation over the longer term.
Pros: Purchasing a well-chosen property can provide capital appreciation over the medium to long term. There are also opportunities to gain rental income from the property by, for example, your business leasing the premises and paying rent to the fund.
Cons: Commercial and residential property is a low liquidity asset. If you needed to sell it to meet the fund’s expenses, the process could take months. Another potential downside for smaller SMSF funds is that you may have a large proportion of your capital in a single asset, reducing diversification. In some instances, trustees use an LRBA so they can keep other assets in the fund.
The Mortgage Agency can help you seamlessly navigate property investment in your SMSF. Book a free discovery session to find out more.
Shares
What it is: A portion of the ownership of a company. Shares may entitle you to receive dividends and have voting rights on company decisions. You can invest in shares of many different companies, from large, well-known names to speculative start-ups.
How to invest: The most common method of investing in shares is via an online brokerage platform. You can also use an “in-person” brokerage, which may also provide recommendations. Fees are usually higher for the latter service.
Who it’s for: Australian and international shares are a sensible part of any SMSF portfolio looking for long-term growth and dividends (payments companies make to shareholders from their profits). Dividends often become more important as you get closer to retirement age and need income.
Pros: Investing in blue chip stocks can mean lower volatility and consistent dividend income. The majority of the most popular share holdings in SMSFs are blue chip stocks, including the big four banks, Telstra, Wesfarmers and Woolworths. Many Australian shares also offer franking credits, meaning you can offset some of your tax liabilities with credits for taxes that the company has already paid.
Cons: The value of shares can go down as well as up, so you need to be comfortable with some volatility; having a long-term investment strategy can help ride out market dips. There is also the risk that companies themselves make poor decisions, which can affect their growth and dividend yield.
ETFs
What it is: An ETF is an investment vehicle that automatically tracks a specific index of shares. For example, an ETF tracking the ASX 200 allows your SMSF to invest in the 200 largest companies in Australia. You can also invest in more niche indexes such as those tracking gold, property or ethical investments.
How to invest: As with investing in shares, most people buy ETFs through an online brokerage platform.
Who it’s for: ETFs are a good choice for your SMSF portfolio if you want exposure to the stock market without having to research and select individual stocks. It’s also a good choice if you prefer a simple, low-cost investment vehicle.
Pros: ETFs give you investment exposure to a broad range of companies, diversifying your portfolio and reducing risk. Plus, because ETFs are essentially automated to track an index, their running costs are lower, meaning the fees you pay to own them are typically lower than with individual shares (although ETF fees can vary widely, so always do your research).
Cons: Again, like shares, ETFs can fall as well as rise in value. Smaller niche ETFs often have more volatility. There may also be some inaccuracies between the ETF and the index they track, depending on the methodology and technology the company providing it uses.
Cash and term deposits
What it is: Instant access accounts or fixed-term investments, which mean you lock your money away for a certain period – typically with a bank – in return for a higher rate of interest.
How to invest: You can open a bank account or term deposit with many financial institutions, from banks to credit unions. Shop around for the best interest rates, and regularly review to ensure you are getting the best returns. I recommend that you check that your bank is a government-authorised, deposit-taking institution, as your money is then protected up to $250,000 if the bank fails.
Who it’s for: Cash and term deposits provide liquidity and capital stability for SMSF owners. Having a portion of your portfolio in cash also means you can meet fund expenses without having to sell assets.
Pros: These investments are among the lowest risk, so they preserve your capital. They also provide liquidity for paying fund fees and pension income, and can be used when new investment opportunities arise.
Cons: Typically, especially over the long term, cash and term deposits don’t provide as high returns as property, for example. Interest rates can vary and inflation can diminish your real returns.
Collectables and personal use assets
What it is: Items that are ordinarily used or kept for personal enjoyment. These might include paintings and sculptures, wine, vintage cars, first editions and limited editions of items, such as postage stamps, antiques and memberships of social clubs.
How to invest: You must invest in these in the fund’s name and follow the strict rules around storing them.
Who it’s for: SMSF owners with an in-depth knowledge of a particular collectable market are often comfortable investing in such assets. However, if you are willing to do the research and manage the additional compliance obligations, they can offer a niche long-term diversification asset.
Pros: Rare items can increase in value over time. These sorts of investments also provide diversification for your portfolio outside of traditional financial markets.
Cons: You cannot use them. If you buy a vintage car for your SMSF, you can’t drive it. Also, you need to ensure that you have adequate insurance, and getting accurate valuations of these types of items can prove tricky.
Commodities
What it is: A raw material that can be bought and sold on the market. Common commodities include gold, silver and platinum.
How to invest: You can invest in either physical assets or into a financial vehicle that invests in your chosen commodity. If you purchase, say, gold bullion or jewellery, you will need to store and insure it correctly. Alternatively, there are a range of ETFs and mutual trusts that give you exposure to commodity markets. You can purchase these via an online platform or a broker.
Who it’s for: Commodities provide a defensive asset, especially if they are part of a diverse SMSF portfolio that also holds shares, property and cash.
Pros: Commodities, especially precious metals, are often regarded as a hedge against economic uncertainty and inflation, so are good in terms of capital preservation. They are different to financial investments like shares and term deposits, so offer more diversification.
Cons: Global markets, supply-side disruptions and government fiscal policy can all cause commodity prices to fluctuate. They also don’t offer any additional income, such as dividends or rent.
Cryptocurrencies
What it is: A digital asset – such as Bitcoin or Ethereum – that operates on a blockchain, which uses algorithms to record transactions. Cryptocurrencies operate independently of any central bank.
How to invest: The easiest way to invest in cryptocurrencies is through a trusted platform. Always ensure they are registered and have a secure website. You could choose to invest directly, but you will need a secure crypto wallet registered to the SMSF – and don’t forget the password!
Who it’s for: Those who are comfortable with high volatility in part of their portfolio.
Pros: At times, some cryptocurrencies have enjoyed spectacular growth, so they could give a big boost to your SMSF total. Investing in crypto also adds another asset class to your portfolio, meaning more diversification.
Cons: While cryptocurrency could prove to be one of your high-yield SMSF investments, the volatility of the asset is significant. For example, in October 2025, one bitcoin was worth $122,200; by February 2026, it went as low as $60,000. There’s also the potential for regulatory changes, and, of course, security risks. The ATO has advice on keeping crypto assets protected.
Trusts
What it is: A form of investment whereby people pool their money to invest in a range of assets, and then usually receive income from the trust. Trusts can be listed (traded on the stock exchange) or unlisted, meaning they are private investment vehicles.
How to invest: You can invest in trusts through banks, investment platforms, or brokers. Some financial advisers or online investment platforms may allow you to buy units in a trust.
Who it’s for: If you want exposure to assets that are typically not so easily accessible, trusts could be for you. They tend to be better for those with a longer-term investment strategy.
Pros: Depending on the type of trust, it can provide investment exposure to a range of assets, such property and infrastructure. Some trusts also distribute regular income payments to investors, which could be useful as an income stream when you reach retirement age.
Cons: Trust structures can be complex and may come with specific compliance and administration requirements. Furthermore, trusts can sometimes be difficult to sell quickly if you need more liquidity in your SMSF.
How do you choose the assets for your SMSF?
The most recent government report paints an interesting picture of where Australian SMSF holders invest their funds.
Shares make up the biggest portion of total SMSF investments at 31%. Trusts come second at almost 20%, with property rounding out the top three at 16% of the total.
Interestingly, cryptocurrencies at 0.3%, and collectables and personal use assets at just 0.07%, show that most SMSF investors are less willing to put much of their portfolio in these high-risk assets.
However, these are broad trends, and your SMSF investment strategy will be unique to you. Here are three questions you can ask yourself to help work out what asset allocation will work best.
How much income do you need to fund your retirement?
Everyone imagines their retirement differently. If you are frugal, prefer home to travel and would rather buy a pot plant than a powerboat, you will need less income than someone who prefers the opposite. As such, you might favour less volatile blue chip shares that offer lower growth but consistent returns.
What’s your investment timeframe?
Starting an SMSF at 25 will likely involve different investment decisions than if you start at 50. You will have more time to ride out ups and downs in the property market, and the earning potential to fund things like an LRBA to purchase a property in your SMSF. As a general rule, the closer you are to retirement, the lower your risk should be.
What is your risk tolerance?
While you want to maximise your investment returns, there’s no point doing so at the expense of your current well-being. If you know you are prone to fretting about the security of your assets, choose lower-risk investments and a well-diversified portfolio. The returns might not be so high, but you’re not spending all your time stressed out.
SMSF investment restrictions you should be aware of
While an SMSF offers choice and flexibility when it comes to your investment decisions, it’s not entirely unrestricted. Here are the SMSF restrictions you should be across.
Sole purpose test
Every decision you – and your fellow trustees, if you have any – make regarding your SMSF must be focused on providing retirement benefits to the members of the fund. You must not make decisions based on current needs or wants. The early release of money or assets to fund members or their relatives is actually illegal.
No loans
You cannot use your SMSF to provide a loan to any of the fund’s members or their families. Moreover, you cannot use it as a guarantee for a loan outside of it, as this risks jeopardising the ability of the fund to grow and provide for members’ retirements.
Keep to the arm’s length rule
The arm’s length rule is a common phrase in business, but you also need to know it if you start an SMSF. It means that any transactions must be at fair market rates and the buyer and seller of an asset must act as though they are independent, even if they know each other.
Collectables and personal use assets
If you choose to invest in what are classed as collectables and personal use assets (things like art, jewellery, classic cars and wine), you can’t use them. No driving that vintage motor car or wearing those diamonds out on the town.
All these assets must only be invested in for growth to fund retirement. Moreover, you’ll need to keep them stored somewhere that is not your premises and have them adequately insured.
It pays to stay up to date on all SMSF investment restrictions, as breaching the rules can mean fines, removal of tax concessions and even disqualification of trustees from running an SMSF.
If you have any questions regarding SMSF investment restrictions, reach out to a trusted and reputable financial advisor, lawyer, or accountant.
6 strategies to grow your SMSF
The ultimate goal of an SMSF is to grow the worth of your assets so that you can fund the retirement lifestyle that you want. So, it pays to be strategic about where you put your money, without unnecessary risk. Here are six ways to go for growth with your investment options.
1. Diversify your investments
Diversification simply means spreading your money across different assets to help manage risk. In other words, don’t put all your eggs in one basket.
Many SMSFs combine international and Australian shares, property, ETFs, cash and other asset classes rather than relying on a single investment type.
2. Focus on long-term horizons
Superannuation is designed for retirement, so SMSF investments generally perform best when managed with a long-term strategy, rather than chasing wild profits with short-term speculation.
3. Reinvest income and gains
If you retain share dividends, rental income from property, and any realised capital gains within the SMSF, you can reinvest those funds into new assets. This often helps grow the fund’s asset base and so supports stronger outcomes.
4. Balance liquidity risk
Liquidity refers to how easily an investment can be converted into cash without significantly affecting its value. Keeping some of your portfolio in cash means you can cover expenses (from investment fees to the servicing of an SMSF property loan) without having to sell assets when they might be less profitable. However, too much cash can mean lower returns over the long run; it’s all about balance.
5. Consider commercial property
An SMSF commercial property investment can be a powerful long-term strategy, especially with a Limited Recourse Borrowing Arrangement (LRBA). An LRBA allows your SMSF to borrow money to buy property while limiting the lender’s claim to the asset itself – not your other SMSF assets.
Plus, if you or any of the fund’s trustees run a business, your business can lease the property from your SMSF at market value, with the rent becoming an income stream.
6. Use your concessional tax advantage strategically
Like most superannuation funds, concessional contributions are taxed at 15%. However, within traditional funds, that tax is usually taken at the time of the deposit. With SMSFs, it’s usually only taken at the end of the financial year. To maximise growth potential, invest your contributions early in the financial year.
Common SMSF investment mistakes to avoid
When it comes to starting an SMSF, it can be tempting to rush in and start investing straight away. However, the better your strategy, the more likely you are to succeed with your pension goals. Here are some of the common mistakes to avoid when setting up your fund.
Chasing trends and tips
When you’re starting an SMSF, you’ll find everyone has an investment idea for you, from influencers online to your friends and family. Some might be good, of course, but always do your own research and ensure it fits with your SMSF strategy – and your risk profile.
Taking on too much risk
We all love to see our investments grow, but that must be balanced by managing risk. Remember, an SMSF is a vehicle for long-term growth to fund your retirement. Avoid overstretching your resources in pursuit of higher gains; it may come back to bite you.
Not sticking to the rules
SMSF investments must comply with Australian Taxation Office (ATO) regulations and reporting requirements. These include an annual independent audit, documenting the investment strategy, maintaining sufficient liquidity to meet expenses and pension payments, as well as filing a tax return each year.
Failure to follow the rules – or even failure to file your return on time – can mean severe penalties. These can include fines, loss of concessional tax treatment and even disqualification of trustees from running the fund.
Not reviewing your strategy
Your SMSF asset allocation strategy is not set in stone. Indeed, it’s part of the legal requirements of running an SMSF that you review the strategy annually to ensure that it meets the needs and risk profiles of all the trustees. Remember, your strategy is likely to change – perhaps by moving into “safer” assets – as you get older.
How The Mortgage Agency can help with your SMSF planning
Starting an SMSF can be a great way to fund the retirement you want. As long as you are willing to take on the administrative and compliance responsibilities, an SMSF offers greater flexibility and transparency than traditional superannuation funds.
The key to a successful SMSF is choosing the best investments for your goals and risk tolerance. Often, diversification is the most effective strategy to achieve long-term growth while retaining peace of mind.
Property can be a valuable part of a diversified portfolio. At The Mortgage Agency, we understand the technicalities of investing in property through an SMSF and the potential advantages of using a loan to do so. My team of brokers can provide personalised advice on securing the best SMSF loans that align with your investment strategy.
Ready to start?
Book a discovery session with me, Tony Xia, or call The Mortgage Agency on 0423 718 612.
FAQs
How do you value SMSF assets correctly?
For SMSF owners, 30 June – the end of the financial year – is a key date. You must value all your assets at market value on this date every year. If you own shares in your SMSF, you record their price on the ASX. If you hold property, you need a professional valuation, appraisal or comparative data to determine fair market value.
What admin is required for an SMSF?
Running an SMSF does involve more administration than participating in a traditional super – but it’s very manageable. You must keep accurate financial records, prepare an annual return for the ATO, and arrange an independent SMSF audit each year.
What is the process for adding property to an SMSF?
The property must be purchased by the fund and held in its name. The purchase must align with the SMSF’s investment strategy and comply with strict rules set by the ATO. You can purchase property using fund assets or through a limited recourse borrowing arrangement.
