There is no denying that the cryptocurrency market is especially volatile. Unlike any other global stock market, the cryptocurrency market works non-stop, and people from all around the globe can take part in the exchanges. Cryptocurrencies are becoming more popular and even being considered a serious asset by seasoned investors.
Since the price of Bitcoin and other cryptocurrencies has increased in the last year during the Covid-19 pandemic, many self managed superfund investors are now showing active interest in buying cryptocurrencies. Since these self-managed super fund investors are regulated extremely strictly, it is essential to keep in mind some important aspects of cryptocurrencies before adding them into their portfolio.
Investment Strategies
Since cryptocurrencies are relatively new as investment assets, many investors find it difficult to understand their concept. Simply speaking, these are digital currencies that a centralized agency does not control.
For a self-managed super fund investor to invest in cryptocurrency, a solid strategy needs to be in place to pass the sole purpose test. According to this, you must only be able to benefit from your investment in cryptocurrency after your retirement.
By this logic, when you buy cryptocurrencies, you do this completely utilizing your funds but never under your account. This is one of the most important rules to keep in mind.
While every person may have a different investment strategy, this is an important thing to keep in mind as a self-managed investor. You can hold and buy cryptocurrency at your leisure, but you must refrain from trading in them.
While people do trade in cryptocurrencies regularly in today’s day and age, it is not the best idea for a self-managed super fund. This is because of a simple reason: your audit process and accounting can become very complicated if there are too many such transactions.
How to Make Sure That Your Cryptocurrencies Are Compliant?
As a self-managed super fund investor, you need to keep in mind that one of the most important things is compliance. Now, you need to consider some things when your fans are being audited that are involved with cryptocurrency.
It would help if you made sure that all ledgers, transactions, and accounts are operated under the title of a self-managed super fund compared to an individual’s name. You have to make sure that there are no transactions concerning cryptocurrencies under your name.
Additionally, you have to make sure that you take a screenshot of your portfolio, including all the details concerning transactions in a financial year. While funds that are associated with cryptocurrencies are quite complicated when it comes to the auditing process, you will be able to take care of it by following the simple guidelines.
What Cryptocurrencies Are Doing Well?
Cryptocurrencies are not like traditional money. Hence the rules associated with cryptocurrency investment are a little different from those you have to follow when investing in the stock market. There are some cryptocurrencies in the digital world, making it a little difficult to find the one worth investing in.
You generally have to buy cryptocurrencies from exchanges that are available on the internet. Cryptocurrency exchanges are relatively simple, and all you have to do is create your account, get a cryptocurrency wallet, and exchange traditional money for cryptocurrencies.
One of the most important questions to answer is what cryptocurrency is best suitable for the present market. There is a wide variety of cryptocurrencies available in the market. The first cryptocurrency that was ever created is known as Bitcoin, and it is still one of the most important and famous ones in the market.
Everyone more or less starts their journey in cryptocurrency with these. Apart from Bitcoin, other cryptocurrencies worth investing in include Ethereum, Cardano, Bitcoin Cash, Litecoin, Binance Coin, and many more.
Risks of Investing in Cryptocurrencies
It is worth noting that investing in cryptocurrencies comes with a fair share of risks that you have to undertake. While it is true that making any investment is a risky ordeal, the cryptocurrency market is rather volatile.
The value of cryptocurrencies is rising and falling at a rampant stage, which is even true for the more well-established cryptocurrencies. There are some security threats and fraud risks associated with cryptocurrencies as well. For this reason, you have to be very mindful when investing in cryptocurrencies.
As a superfund, investing in cryptocurrencies is a great idea. If you stick to the right strategy and comply with the rules, you can make these investments seamlessly. However, be wary of selecting the right platform to invest in and make sure it is secure and integrated with the latest technology.
