Should you invest your super in cryptocurrencies like Bitcoin?

Should you buy cryptocurrencies like Bitcoin for your super fund? It’s reportedly an increasingly popular retirement investment.

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When it comes to superannuation, most Australians tend to be pretty happy if their super funds grow at a modest rate, perhaps with some volatility protection as well.

That’s why your average super fund is usually classed as ‘balanced’. This means it invests your money across multiple asset classes to balance between growth potential and volatility protection.

These asset classes usually consist of a mix of ASX shares, international shares, bonds and cash. Since most Aussies tend to be pretty protective over their super funds’ balance, the idea of investing in cryptocurrencies like Bitcoin (CRYPTO: BTC) through super might be unthinkable.

But this idea is reportedly gaining steam.

CEO of BTC Markets, Caroline Bowler, recently told BusinessInsider that she estimates the cryptocurrency exchange now has 5 times as many self-managed super funds (SMSFs) trading on it as during the last cryptocurrency boom in 2017.

“People are looking at it now as something other than as a speculative thing. They’re looking at it as something that’s been around, that’s been tested, that is a genuine investment”, she told BuinsessInsider.

Bitcoin super?

Now, most industry and retail super funds do not let members invest in Bitcoin or any cryptocurrency for that matter. But those restrictions don’t apply to SMSFs.

In fact, according to the Australian Taxation Office (ATO), an SMSF can invest in any ‘collectable or personal use assets’. There are rules around the interpretation of what constitutes a collectable or personal use asset, which you can (and should) read more about.

But these can include anything from gold bullion, artworks and jewellery to wine, boats or vintage cars. And yes, cryptocurrencies like Bitcoin.

So, should you add Bitcoin to your super fund?

Well, it pays to remember that your super fund has the potential to be your biggest asset for retirement outside your family home. As such, you might want to consider the impacts of investing these funds in an asset like Bitcoin.

Cryptocurrencies are some of the wildest and most volatile assets in existence. Remember, Bitcoin has fluctuated between ~US$7,500 a coin and ~US$60,000 a coin in just the past 12 months. And it famously crashed by more than 80% between December 2017 and December 2018.

If you can’t handle that kind of wild ride in your super fund (or indeed out of it), it might not be worth even considering including Bitcoin.

But it’s certainly interesting that some investors are choosing to pursue Bitcoin and other cryptocurrencies with their retirement savings.

Sebastian Bowen owns shares of Bitcoin. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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