Trading in Australia using a superannuation

is it possible to trade using your super in australia?

twiggy

No

Opinion or fact?

Source?

go and find a way to withdraw your super, then you can go and trade it and prove that you can trade your super.... so to speak.

otherwise, super is just managed by the funds and in it's own way is already being used in trading, just not controlled by you.

the answer to the question is no, unless you withdraw your super.

As I understand it, it can be done if you have a SMSF. Search your brokers PDS or terms and conditions, it should be in there.

From memory it can be done if the trustees give personal guarantees in the event of a margin call.

You can after you retire

Exactly, original question was too vague, answer will be different for each individual and circumstance; seek professional advice

trade what? forex, CFD, shares, baseball cards?

Hi Twiggy

During retirement it shouldn't be a problem but I guess you want to do this before retirement

Before retirement and During accumulation phase it should also be possible provided you have a SMSF and as long as your SMSF trust deed allows it.

If there is no mention of FX in the trust deed then you could arrange a meeting between the SMSF trustees (yourself and your wife?) to update your SMSF's investment strategy document and to include FX.

FX is risky though, how much of your super are you willing to risk?
I think it will be best to use own money for trading, that way you still have your super preserved for that old age....

I have however used my SMSF cash balance on a few occasions for buying blue chip stocks. The risk is minimal and the added benefit of the blue chip stocks is the 30% fully franked dividend so your SMSF can benefit from tax free devidend plus the remaining 15% franking credit which you can use towards other SMSF income

I hope this helps.

I've also wondered if it was possible to do this, perhaps by setting up a self managed super fund or something along similar lines.

Regards, Paul.

Even if you find a way to trade forex with a self managed super fund you have a lot of expenses such as auditing etc.

As for getting you money out of super it is limited to $10,000 PA and you have to claim hardship, basically you need to be unemployed and have debts that have to be paid now and you have no other way to pay them.

If you have a good system you don't need a lot of capital anyway, if you have a bad system you will end up with not a lot of capital.

Good point, it costs me $2Kpa in accounting and auditing fees.

True and even if you do get some money out it will be limited to your hardship situation.
Exactly, and you don't want to have a lot of $ available in the beginning anyway because when you are learning you are likely to wipe it all out....

I'm in the process of setting it all up with esuperfund. They set you up with a default trading account tied to CMC markets and a bankwest savings account from which your trading costs and gains will ebb and flow from.
No doubt you can trade Forex, nothing stops me from opening a new account with a broker in my sms fund's name.

Would I want too? Probably not but like others said buying blue chips after a big crash would be very appealing and perhaps a couple of small long term positions in futures.

Definitely wouldn't want to trade that money in the conventional sense with stops as it would erode away to nothing in my case.

From here.

Except in certain limited circumstances an SMSF is not permitted to charge its assets, or to borrow.

These are both dangers to watch out for when opening a trading account.

Since the SMSF cannot borrow to trade, inevitably the SMSF will need to deposit money with the trading platform in order to trade.

The question then arises whether the deposit of money is a "charge of the assets", in other words whether the deposit is security for any money owed to the trading platform (or anyone else) by the SMSF.

In the case of forex and CFD trading, many such platforms do indeed state in their terms and conditions that the money is such security (for example to cover a margin call). Some do not state this. Some use wording which is unclear about this matter. In each case the ATO recommend that you carefully consider the fine print of the terms and conditions of the platform to see whether by depositing money you are charging the assets of the fund. See ATO decisions ID 2007/56 and 2007/57 which are CFD cases but are equally applicable to forex trading.

As for trading in shares and the like, an SMSF is only permitted to open a cash sharedealing account – a margin account is not permitted (ATO decision ID 2007/58). This is because a margin account by definition involves borrowing which is not permitted.

However again the fine print of the trading platform should be examined to ensure that the platform does not rely on the deposited funds as security of any sort. In most cases this will not be the case, however in the terms and conditions of one popular online trading account in Australia such funds are expressly stated to be security for any indebtedness to the platform. And indeed any purchased shares are also stated to be security for this. These terms are very worrying because it means that SMSFs using this particular broker are inadvertently in breach of the regulations.

In conclusion therefore on the question of charging assets you need carefully to check the fine print of the trading platform or broker. If in doubt get legal advice or ask the trading platform or broker's legal department directly to confirm that deposited funds are not used as security or charged within the meaning of superannuation law.

There is another point. The auditor has responsibility to check that the fund's investments are made in line with the investment strategy. Therefore your trading should follow the investment strategy. And the investment strategy should given consideration to risk, return, liquidity and diversification of the fund's investments.

Some other member already replied to your query. If you are a Australian Trader or trading with Australian broker then here is a website Forex Australia. It is totally free educational forex website that teaches traders how they should navigate the markets with profit.

Yes, it's possible to open forex account with super.
1. Open a SMSF account.
2. Rollover your super money into SMSF account.
3. In IG broker, open SMSF forex account (not all broker support this type of account).

Then you can trade in that SMSF account.
Keep in mind:
1. Standard super managing company will charge around less than $1000 pa, but SMSF account will cost around $2000 pa (accounting + auditing).
2. IG has some crieteria to open a SMSF account. To have portfolio over $1 million (tradable money).
3. If you are not a Profitable trader, then don't gamble with your super, just stay away.