Creating a Financial Plan for SMSFs with Private Equity Investments

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Reach Alternative Investments
October 30, 2023
min read

Private equity investments often form an important part of a financial plan for those who self-manage their Superannuation. This potentially lucrative option can be accessed through platforms like Reach Alternative Investments, but understanding the nuances of private equity is crucial for incorporating it successfully into your Self-Managed Super Funds (SMSFs). This article offers insights into creating a financial plan for SMSFs with private equity investments, outlining its benefits and the role of Reach Alternative Investments in navigating this asset class.

What are Private Equity Investments?

Private equity involves investing in non-publicly traded companies, making active efforts to secure value maximisation before exit. These are not typically available on the common market, being accessible instead through specialised funds. Private equity investments offer potential for high returns, albeit with increased risk, alongside a diversification option beyond traditional shares and bonds contained in a typical SMSF portfolio.

Why Should SMSFs Consider Private Equity Investments?

Private equity can present an appealing diversification for portfolios heavy in listed or public equities. The possibility of substantial returns can offset the relatively illiquid nature of these investments, aiding SMSFs aiming to grow their super balance. Additionally, private equity's low correlation with traditional investments can provide diversification, thereby reducing portfolio risk.

How Can Reach Alternative Investments Aid with Private Equity?

Reach Alternative Investments enables access to top-tier private market funds globally, offering an avenue for SMSFs to venture into this exclusive asset class. They provide a legal, transparent structure for wholesale investors in Australia and ease the investment process through a seamless digital interface. From fund research to tax reporting, everything is managed here, thus facilitating an efficient build of your private equity portfolio.

How to Incorporate Private Equity Investments into SMSFs?

Start by investing a relatively small portion of your SMSF into private equity. Monitor its performance and then consider increasing your allocation judiciously over time. It's crucial that your SMSF remains compliant with Australian Tax Office regulations throughout, especially given private equity's typically longer lock-in period.

Do Private Equity Investments Require Enhanced Due Diligence?

Yes, private equity investments are more complex than traditional investments and typically entail longer holding periods. Consequently, they require enhanced due diligence. With Reach Alternative Investments, we help you with navigate the difficulties with detailed fund information, and continuous portfolio monitoring.

Wrap up: Is Private Equity Investment Right for your SMSF?

Private equity investment can be a powerful tool for SMSFs, provided it aligns with your risk profile and investment objectives. Reach Alternative Investments, dedicated to making this process easy and efficient, can be a viable resource for those venturing into this asset class. Remember, like any investment, it requires thorough research, proper due diligence, and continuous monitoring.

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