Where to Invest Your SMSF

A self-managed super fund allows you to manage your private funds on your own. Therefore, you can choose where to invest or what type of insurance you will avail of using your SMSF. For this reason, you need to make a wise decision to have the best-managed funds for SMSF. Let’s talk more about it in this article. 

Investment Diversification 

You may have read an article on the Internet about why you should diversify your SMSF investment. But first, we’ll discuss what it is. 

What Is Investment Diversification? 

Diversification in investing is the technique investors use to lessen the risks of failing to achieve their financial goals. As the term suggests, it is when investors put their finances in different industries, financial instruments, and other categories. 

Although doing this does not really guarantee that you will be completely safe from loss, investing in various financial platforms will help you reach your financial goals with fewer risks. For example, if one industry where you invested your finances has a downward trend, you still have the others to depend on in reaching your objectives. 

The Options You Have… 

If you have a self-managed super fund, you may invest in the following: 

Australian and International Shares 

Investing in the right shares will help you grow your wealth. Hence, you have to evaluate the market before diving in. If you are planning to invest in Australian shares, you have to stay updated with the trends of the market and the economic changes. 

It would help to read resources relating to these: 

  • Reserve Bank of Australia’s quarterly Statement on Monetary Policy 
  • New economic information  
  • Economic forecasts 
  • Interest rates 
  • Exchange rates 
  • Government policies 
  • Industry-specific or regional influences  

Also, take note of the pros and cons of investing in Australian shares: 

Pros: 

  • The value of the capital gains from owning an asset may grow as time goes by. 
  • You will receive income from dividends. 
  • Long-term capital gains have lower tax rates. 

Cons: 

  • There is the risk of the companies going bankrupt, which will result in you not getting your money back. 
  • Company share prices may decrease drastically. 
  • Your shares value won’t have a stable trend, and the dividend you will receive will vary. 

On the other hand, here are the pros and cons of investing in international shares: 

Pros: 

  • You are allowed to invest in different companies even if the Australian market has not represented or under-represented them. 
  • It gives an investment diversification to your portfolio. 

Cons: 

  • It is highly volatile due to the changes in currency exchange rates. 
  • Changes in the country’s regulation and the political situation may affect your investment. 
  • There are possible trade and information delays. 
  • It does not have the same tax treatment as Australian shares. Therefore, you need to have a professional to give you advice about the taxes. 

Residential or Commercial Properties 

Some people think that investing in residential and commercial properties only means that they buy the property to use it for themselves. However, what they fail to realise is that they can get income out of it. 

If you invest your SMSF in real estate, you can rent your property out to the tenants. And in most cases, they will be the ones who have to pay the expenses on the property, including the taxes. Thus, investors will get a return of investment more quickly, and they don’t even have to manage the house or commercial building full-time. 

Fixed Income Securities 

Investing in fixed income securities would mean that you will get a fixed rate of income after a specified period starting from your date of investment. Meaning, you will receive the full amount of investment upon the maturity date. With this type of arrangement, you will be guaranteed to receive a fixed sum of money regardless of the economic changes in the country or the market performance of the industry you invested in. 

Collectables 

Collectables might have a higher value compared to their purchasing price, especially if collectors sought upon it. When collectors or fans of a particular merchandise can’t find a specific tangible asset in the market, they rely on those who sell those rare items and are more than willing to pay a large amount.  

Some experts say that investing in geeky stuff like comic books, board games, stamps, dolls, action figures, trading cards, and coins are worth it. It may also include artwork, jewellery, artifacts, wine, and memorabilia. While there is no assurance that investors will get more out of it, SMSF allows you to invest in collectables and personal use assets. 

Regardless, you have to bear in mind that the collectables aren’t: 

  • Leased to a member of SMSF (self-managed super fund Australia) or other parties involved 
  • Stored in a member’s private residence 
  • Provide a benefit for the SMSF member and the concerned parties during the present 

Physical Commodities 

Physical commodities are raw materials that support the growth of the economy. Popular examples are gold, silver, platinum, oil, corn, natural gas, sugar, and soybeans. Economists believe that these physical commodities are the best ones to invest in because their demands increase during high inflation periods, resulting in an increase in prices. 

Moreover, investing in physical commodities has a high potential of skyrocketing returns because the effects of inflation won’t affect them. 

Bitcoins 

The investments mentioned beforehand are the common types of investments that people put their money on. Now that we are in a world full of endless possibilities brought about by technology, one of the best-managed funds for SMSF is Bitcoin.  

Bitcoin is the most famous type of cryptocurrency—making it an advantageous option for SMSF investment. While the volatility of Bitcoin is high, it has the potential to give investors a higher amount in the future compared to the present. 

Want to Buy Bitcoins Using Your SMSF? 

From the list presented above, have you decided what the best-managed funds for SMSF are? If you think that investing in Bitcoin is a risk you’re willing to take, we can help you set up your self-managed superannuation funds to buy Bitcoin. Just check out our contact page at https://bitcoinsuperannuation.com.au/contact/ to reach out to us.

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