Cryptocurrencies have been all over the news lately, and many people are wondering if they are a good investment. While some investors are bullish on crypto, others are more cautious. Here, we will explore some of the reasons why some SMSF investors might be hesitant to invest in cryptocurrencies.
Before anything else, what is SMSF investment?
SMSF, or self-managed super funds, are a type of superannuation fund that gives members more control over their retirement savings. SMSF investors are typically quite savvy and have a good understanding of investments. The same can be said of SMSF crypto investors.
Can SMSF investors really invest in crypto?
The short answer is yes, SMSF investors can invest in cryptocurrencies. But as with anything, there are a few things you need to keep in mind before investing in crypto with your SMSF.
Why are some SMSF investors cautious about investing in crypto?
Volatility
Cryptocurrencies are notoriously volatile. This means that their prices can go up or down a lot in a short period of time. For SMSF investors, this might be seen as too risky. After all, SMSF funds are meant to be long-term investments.
Lack of regulation
Another reason why some SMSF investors might be cautious about investing in crypto is the lack of regulation around cryptocurrencies. Unlike other investments, there are no government regulations governing cryptocurrencies. This might make some investors feel like they are taking on too much risk by investing in crypto.
Lack of understanding
Many people still do not understand how cryptocurrency works. For SMSF investors who want to be sure they understand an investment before putting money into it, this lack of understanding can be a deterrent.
Fear of the unknown
Some SMSF investors might be cautious about investing in crypto simply because it is something new and unknown. With any new investment, there is always a certain amount of risk involved. And for some investors, the risks associated with investing in cryptocurrency might outweigh the potential rewards.
They don’t trust exchanges
Another big reason people may be weary of investing in cryptocurrency is because they don’t trust the exchanges. There was a time when the largest Bitcoin exchange famously shut down after 850,000 Bitcoins were stolen, causing a lot of people to lose faith in exchanges and cryptocurrencies as a whole.
They worry about taxes
Investing in cryptocurrency can be a bit complicated when it comes to taxes. In the United States, for example, the IRS has said that Bitcoin and other cryptocurrencies are property, not currency. This means that capital gains tax applies when you sell your crypto for more than you bought it for. For some people, this could be a dealbreaker.
These are some of the reasons why some SMSF investors might be hesitant to invest in cryptocurrency. Do you think these concerns are warranted? Or do you think SMSF investors should take the plunge and invest in crypto? Let us know your thoughts in the comments below!
