Episode 34: Setting up and maintaining a Self-Managed Superannuation Fund (SMSF) and deciding how to invest (eg, in bitcoin, gold, commodities, stocks, bonds, property, collectibles, etc)
Australian Bitcoin Podcast
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Hosts: https://twitter.com/mission_bitcoin & https://twitter.com/jeremy_m16
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Notes
Why did we set up a Self-Managed Superannuation Fund (SMSF)?
- consolidating superannuation fund management fees
- investment fund managers have no "skin in the game" and their choices may be influenced by the "path of least resistance" (eg, government regulations, internal business policies, incentives they receive for certain investments, not wanting to take career risk on new asset classes, etc)
- ability to buy and self-custody bitcoin (and other assets), and to have overall autonomy and flexibility in terms of investment choices
What was the process of setting up our SMSFs?
- Step 1: Choosing a SMSF Administrator (or changing to a new one)
- Step 2: Establishing the fund (eg, choosing individual or corporate trustee setup, completing the right documentation, establishing a fund investment strategy)
- Step 3: Setting up a SMSF bank account (eg, using the SMSF name, tax file number, and Australian business number)
- Step 4: Setting up a SMSF HardBlock account (similar to the bank account step above)
- Step 5: How to roll-over existing superannuation into your new SMSF, or make fresh contributions to the SMSF
- Step 6: Deciding how / where to store your bitcoin (eg, self-custody vs exchange vs third-party custody service)
- Step 7: Buying bitcoin from the exchange (and keeping appropriate records)
- Step 8: Withdrawing bitcoin from the exchange to self-custody (and again, keeping appropriate records)
- Step 9: Completing the annual lodgement process (e.g., summarising buy, sell, and withdrawal records; proving ownership of the bitcoin; and passing the sole purpose test)
How did we decide what to invest in?
- saving in hard money (eg, bitcoin, gold) versus investing (ie, risk taking) in property, collectibles, stocks, or bonds versus holding currency (ie, dollars)
- learning how to value an investment (eg, if it's a stock, looking at the company's roadmap, leadership team, assets, liabilities, cash flow, and current market capitalisation)
- doing your own research or paying for a subscription to expert research (and you can use your SMSF to foot the bill!)
- ideally choose money or assets that: 1) are not currently overvalued, 2) have good long-term fundamentals, 3) have ample liquidity and ability to sell small portions, and 4) have low or no counterparty risk
- consider the contrarian mindset (ie, you might not want to be in "crowded investments")
- keep in mind risk management and the fact you cannot predict black swan events
- if you decide to primarily hold hard money, then keep in mind the properties of good money: scarcity, durability, immutability, portability, acceptability/recognisability, divisibility, and fungibility
Resources
https://www.hardblock.com.au/SMSF-bitcoin-investment
https://en.wikipedia.org/wiki/List_of_Australian_exchange-traded_funds
Activity