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Share Market Toolbox

SMSF
investing

You could have total control, and be in charge of your own destiny.
It might be permissible for you to buy and sell shares
inside your Self Managed Super Fund (SMSF).
You are here: Share Market Toolbox > Share Market > SMSF Investing
Related links: Questions for your advisor; Blue chips can disappoint; Funda-Technical Analysis;

How is your financial adviser performing?

With the performance of the share market during the Global Financial Crisis of 2008 (and the following years), many investors started to doubt the usefulness, or the benefit, of their own financial advisor. Here are some questions for your adviser.

Many investors expressed a desire to take more control of their finances, and their investments, and their superannuation. Many embarked on the joureny of establishing a Self Managed Super Fund (SMSF).

Take care with blue chip stocks —
they can disappoint

Anyone who has invested in blue chip stocks in recent years will be very well aware that some of them (in fact many) can disappoint.
Too many of them fell in value during the GFC and took a long time to recover. See more details about the extent of this issue. So it is important to cut loose the blue chips in bear market conditions, and to consider more than just the conventional blue chips in a strategy.

Can you invest directly in shares?

You might be able to invest directly in shares, using funds from your SMSF. It depends on things like the investing rules that are written up within your fund's documentation. Ask your professional adviser.

Remove the emotion

One of the keys to successful profits in the share market is to avoid emotions. Don't get emotionally attached to any stock. At the end of the day, companies want to make money using shareholder funds. They might sometimes make tough long-term decisions that are not in the long-term best interests of investors. So as an investor, I should not get emotionally attached to any stock. If it's share price is in a download spiral, then I should sell it to preserve my own hard-earned capital. Before the board of directors of a company (like a large mining company) make a mammoth decision, do you really think they stop and ask: "Now how will this decision affect our small retail investors?"

Why invest from your SMSF?

If you believe that it is possible to "time the market", then perhaps it is worth considering using some SMSF funds to invest in the share market. Let it be said that there are many investors and traders around the world who do successfully time the market, even inspite of so-called professional advice that it is not possible to do this. If there are thousands of people who can do it using proven strategies, then it can be done.

Utilise the "stop loss" approach

Experienced traders know very well that one key to success is to let your profits run, and to limit your losses.
But how do you limit losses? It is vital to do two things:
(a) Determine a "Stop Loss" level for each stock held - ie. the price below which we no longer want to hold the stock; and
(b) If the Stop Loss level is breached, then sell the stock without a second thought.

Caution

Be careful not to run a business from an SMSF - such as that of a share trader with frequent share trades (a very grey area). Remember that a super fund must be administered for the sole purpose of providing retirement benefits for fund member(s), and not itself run a business. Consult a qualified professional for advice on this aspect. Investment decisions need to be in line with the documented investment strategy for the fund.
 

Technical analysis provides the clues

The field of study known as technical analysis provides all the clues to be able to be successful in the markets. Make sure to develop a sound strategy, and test it out before risking real money.

Some important considerations

The laws regarding Self Managed Super Funds is rather lengthy and somewhat complex. Following are some issues that you might need to consider:
  • Are you permitted to invest SMSF funds in financial instruments other than shares? That is, in CFDs, options, warrants, foreign currencies.
  • Are you permitted to borrow money to leverage your SMSF funds? (eg. margin loan, bank loan, etc.)

Great Australian charting software

Get in control of your investments with a solid understanding of how the company share prices are performing - see the trends, set a limit for losses, see where to take profits.
BullCharts charting softwareBullCharts is a great charting software package, built and supported in Sydney Australia, since 1995.
See more details about BullCharts.

Where to next?

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Useful SMSF links

In no particular order, and with no recommendations, and no guarantees for reliability, accuracy, or truthfulness - always check your advice:
 Try Googling for these terms:




Back to top.

Conclusion?

Can we draw a conclusion from the above details? How about the following:
  1. Perhaps you can use your SMSF funds to invest in the share market - make sure to check it out.
  2. It is possible to "time the market". Many investors and traders do it now.
  3. Learn how to read simple price charts to determine the underlying market mood and sentiment.
  4. Don't get emotionally attached to any stock, and be prepared to cut it loose if necessary.
More information that could be useful for you:
And whatever you do,
beware of the sharks in the ocean!

 Beware the sharks in the ocean.
This is one of the many tools in Brainy's Share Market Toolbox.

The information presented herein represents the opinions of the web page content owner, and
are not recommendations or endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor should be engaged.

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Last revised: 29 July, 2015.