What Can You Invest in With Your SMSF? A Guide to Permissible Assets
- WT Capital
- 1 day ago
- 3 min read
A Self Managed Super Fund (SMSF) opens the door to a wide range of investment options not typically available through retail or industry superannuation funds. With control comes opportunity—but also responsibility.
Understanding what you can invest in, and under what rules, is critical to keeping your SMSF compliant and aligned with your retirement goals.
Why Investment Choice Matters
One of the biggest advantages of an SMSF is the ability to take direct control of your retirement savings. Unlike managed superannuation products, SMSFs allow you to tailor your investment strategy to suit your financial objectives, risk appetite and knowledge.
But with that flexibility comes a strict regulatory framework. The Australian Taxation Office (ATO) requires all SMSF investments to meet the sole purpose test: they must be made solely to provide retirement benefits to members, or to their dependents in the event of a member’s death.
So, what exactly can you invest in?
Common SMSF Investment Types
Here’s a breakdown of the main asset classes permitted within an SMSF:
1. Listed Shares
SMSFs commonly invest in shares listed on the ASX or international exchanges. These offer diversification and liquidity. Blue-chip stocks, ETFs (Exchange Traded Funds), and LICs (Listed Investment Companies) are often used as core holdings.
Compliance tip: All transactions must be done at arm’s length—meaning the fund cannot buy shares at non-market rates from a member or related party.
2. Managed Funds
You can invest in professionally managed investment products, such as diversified or sector-specific managed funds. These are useful for trustees who want exposure to markets without directly picking individual stocks.
3. Cash and Term Deposits
Low risk, but low return. Cash holdings provide liquidity and stability. Term deposits can also be used to lock in fixed interest returns.
4. Direct Property
SMSFs can purchase residential or commercial property—one of the most powerful wealth-building tools when used strategically.
Residential property: Must be purchased from and rented to unrelated parties (e.g. not members or their relatives).
Commercial property: Can be leased to a related business entity at market rates—making it a popular option for business owners.
5. Cryptocurrencies
Yes, you can hold cryptocurrencies like Bitcoin in your SMSF—provided it’s part of a documented investment strategy and held via a compliant, separate digital wallet.
Due to high volatility and regulatory scrutiny, crypto should only form a small portion of a diversified portfolio.
6. Precious Metals and Collectables
You can invest in gold bullion, rare art, vintage cars, or wine—but the rules are tight:
Must be stored securely and separately from personal use
Must be insured within seven days
Must not provide present-day benefit to members (i.e., no hanging that $20k painting in your lounge)
Collectables are often more hassle than they’re worth for most trustees.
What You Can’t Do With Your SMSF
There are several prohibited investment behaviours that trip up DIY investors:
No personal use: You can’t use SMSF assets for holidays, hobbies or personal enjoyment—even temporarily.
No lending to members: Your SMSF cannot lend money to members or their relatives.
No personal guarantees: You cannot offer SMSF assets as security for personal loans.
Breaking these rules can result in significant penalties, including loss of concessional tax treatment.
Your Investment Strategy Must Be Documented
The ATO requires all SMSFs to have a written investment strategy that:
Takes into account members’ age, risk tolerance and needs
Specifies permissible asset classes
Is reviewed regularly (at least annually)
A Final Word on Diversification
While property is a core focus at WT Capital, we encourage all clients to consider diversification within their fund. Holding a mix of assets—whether that’s residential property, cash, ETFs or even limited crypto exposure—can improve long-term resilience and performance.
As ASIC Commissioner Danielle Press has noted:
A well-diversified portfolio is essential to managing risk and achieving retirement outcomes. SMSF trustees need to look beyond a single asset class.
Thinking About Property Through an SMSF?
At WT Capital, we specialise in helping Australians invest in residential and commercial property through their SMSF. From fund setup to financing and compliance, we provide expert guidance every step of the way.
