Undoubtedly these are very specialised areas of investment and typically not suitable for ‘Retail Investors’ but none the less they are investment choices that are available to Member Trustees of a SSAS.
Crypto, Crypto assets and Crypto currencies
In the most simplistic view Crypto is the short hand name that has been given to a relatively new area of investment. These assets have evolved in the last 10 years. The fans of these assets argue that they are an answer to some of the problems of traditional methods of conveying ‘currency’ (Money) and funding some of the new technologies and services that are associated with the ‘Blockchain’.
The blockchain itself is a new concept invented to speed up and make operational transactions in many areas of business and life more efficient and secure.
Watch the following video to learn a little more about this area of investment:
The term derivative is given to a legal agreement or contract that an investor may enter into with another party (a counter-party) where the agreement gives the investor the right to buy or sell a particular asset at price and at a time in the future. The investor may but is not always be obliged to take up (‘exercise’) the agreement. But if they do the counterparty is contractually obliged to fulfil the agreement.
Derivatives can be associated with many different asset types probably all investment types, from shares to currency to commodities such as barrels of oil or food stuffs.
Watch the following videos to learn a little more about this area of investment:
The holding of currency on deposit is not a new investment choice. Of course every SSAS will have a Scheme Bank account, denominated in “£’s” sterling. However, in recent year there has been considerable interest in foreign currencies such as USD (“$”), Euros, Swiss Franks and even the recently invented Bitcoin.
Foreign exchange accounts can be established with depoasit takes for a “Buy and hold” strategy and as the target currenct appreciates (Hopefully) the investment rises in Sterling terms.
To add to this and the subject above of Derivatives certain financial instruments (“Derivatives”) give the opportunity the trade the currencies or more accurately the differences between them and on a high frequency trading basis to speculate on the difference multiplied by the power of derivatives.
Again whilst this investment class is acceptable from HMRC’s perspective it does not make it universally correct to invest in these assets and significant care should be taken before investing. “Derivatives, are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.” Warren Buffett, Berkshire Hathaway 2002
As a Trustee you are required to act with Prudence, Security and a Commercial mind. It would be difficult to argue to Members and HMRC that you have fulfilled your obligations as a Trustee if you did not understand the investment choices, albeit often with expert advice