5 things SMSF investors should consider when trading

Tips

Self managed super funds (SMSFs) are a fast-growing sector of the Australian super industry. Since the performance of an SMSF is highly dependent on the SMSF investment strategy of the trustee, you'll need a trading platform that offers you appropriate tools and reporting. It's worth considering the following points to make sure you're using a trading platform that works for your SMSF.

1. Linking to a cash hub

Asset classes that SMSFs invest in often include cash, property and shares. SMSFs require a dedicated account into which contributions can be received and dividends can be paid. For some, the default choice is a standard transaction account, but a cash management account that acts as a cash hub may offer you other benefits, such as a higher interest rate and reporting features that can simplify the accounting and auditing process for your SMSF.

2. Streamlining accounting

Many SMSF holders opt to use the services of an accountant for managing their SMSF compliance and audit requirements. When using an online trading platform, consider its reporting capabilities and how well it integrates with your cash account and your accountant's own SMSF software in order to streamline and simplify these processes.

3. Access for your financial adviser

If you plan to seek investment advice from a financial adviser, depending on your trading platform, you may be able to give them access to your trading account. You should also consider the trading platform's reporting capabilities and how well it integrates with your financial adviser's planning software.

The quality and breadth of your reporting will also impact your adviser or accountant's ability to assess your financial position…

4. Reporting

The quality of your investment-related reports can impact your ability to make sound decisions around trading. The platform reporting should include your holdings valuations, transaction summaries, brokerage summary and a dividend summary. The quality and breadth of your reporting will also impact your adviser or accountant's ability to assess your financial position, performance and alignment of your SMSF's investments to your SMSF investment strategy. It may also help you with any audit or compliance requirements.

5. Risk management

Risk management is an essential part of an SMSF investment strategy. You should consider whether your platform allows you to place conditional orders which can help you to manage your risk while taking advantage of potential future price movements. Stop-losses can be used to try to limit the loss of a position in adverse market conditions. You can set a buy order to trigger when the value of a stock you want to buy reaches a certain price. You can also set a sell order to trigger if one of your positions reaches a certain level. These types of conditional orders help you to limit your portfolio’s exposure to volatility without having to watch the market all day.

It's important to note that SMSFs are subject to strict investment rules set down in superannuation law. The Australian Taxation Office website provides guidance on some of these rules and an adviser can provide you with specific SMSF advice.

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