Cryptocurrency can seem scary at first. It is a currency that you can’t physically hold, so the idea of investing it can often worry people who are not used to it. However, if you are desperate to try and invest using it, then there are some things you should make sure you learn first.
What is an SMSF?
For people who have not heard of the term, a Self-Managed Super Fund is simply a super fund (like retirement savings or certain company accounts) that you save all by yourself. Newer investors may avoid the SMSF at first, but it can be a valuable asset to have.
As a legal and entirely independent currency, cryptocurrency is sometimes considered to be the ideal partner to an SMSF since both are handled by the user and not a third party. Crypto can be added to an SMSF in the same way that diamonds, gold, and even wine can be.
SMSFs can be a great way to save money as long as you have something to start with, although each fund may differ slightly. Having one when you reach retirement age ensures that you get to keep a huge amount of your wealth or valuable items.
Investing In Your SMSF
Investing cryptocurrency into an existing SMSF is as simple as filling out a form with whoever you are hosting the SMSF through, then making sure that the ATO can approve the transaction.
However, once that is done, you will need an account. Make sure you read into the additional steps you might have to take: this can be things like opening an account on a secure portal, giving the SMSF a new bank account and crypto trading account, and so forth. You will often get help with this.
The most critical part is the deed trust. An SMSF lives and dies on the deed trust, which holds the rules to how the SMSF is governed and who has power over which parts. It will also have all of the terms, obligations, and conditions involved in the arrangement.
Why Use an SMSF?
An SMSF can seem strange at first, but it is essentially just a way to try and save a lot of money before you reach retirement or an age where you can no longer make as much money. The benefits can be incredibly helpful to an aging citizen and are usually an excellent safety net.
It is important to remember that an SMSF works on the Sole Purpose Test. This means that the funds and contents of the SMSF are kept until retirement age or death – you can’t access the currency that you put into it, just like you can’t access other assets that you add, with some minor exceptions.
However, when managed correctly, an SMSF can be a self-managed way to save up a huge amount of money as long as you are confident that you can maintain the fund. Cryptocurrency is just one of many things that can be added to a fund like this.
If you want to know more about how this works, click here for a more in-depth breakdown of what to expect from an SMSF.
