HQB’s Weekly SMSF News – Week 10
Diversification – what does it mean?
- Diversification is the opposite of ‘all your eggs in one basket’.
- A SMSF that has a mix of investment types (e.g. cash, shares, property) could be said to be diversified, particularly if the investments are spread within those categories e.g. investing in 20 different shares, rather than picking 1 or 2.
- A SMSF that is invested in a single rental property is not diversified.
- There is no requirement to have diversification in your SMSF, but it is generally accepted that diversification lowers risk.
- A SMSF that isn’t well diversified needs to include specific commentary in its investment strategy.
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.