Investing in precious metals like gold has long been a good way for anyone to diversify their portfolio. Gold in particular, is regarded as a safe haven investment. Its value is affected by a number of factors that usually affect other invest assets classes negatively like inflation, weak currencies, weak economy, geopolitical tensions etc. One can say: when everything in the world seems crazy, the best place for your money to be is in gold.
You can build your wealth and minus the risk if you buy gold SMSF to save for your retirement.
SMSF portfolios should not concentrate heavily on fixed-income and share markets. These aren’t diverse enough or safe. Especially now with the effect the Corona Virus pandemic is having on the global economy. A lot of gold investors who survived the devastation of the 2008 global financial crisis know how bad things can get. This current Corona Virus pandemic has reinforced the reasoning why gold is important in any investment portfolio.
Gold and SMSFs
The reasons why you would want to buy gold SMSF include the following:
- The price of gold tends to rise when inflation rises and interest rates are low and that is the case right now.
- Gold is not correlated to the share market, which means it is subject to the wild fluctuations that happen on a daily basis in such markets. Gold helps to keep a balanced investment portfolio.
- Gold has always been regarded as a natural currency hedge all over the world.
- Gold does not have any counter-party risk like fiat currencies and it is very liquid.
- This precious metal is a proven safe-haven against economic uncertainty and geopolitical tensions. It reacts better than other precious metals like silver and platinum.
Can you invest in gold using your SMSF fund?
- You can use your SMSF to invest in gold. There are, however some strict rules that you have to abide with. These are “rules pertaining to the type of gold” you are investing in. Under these rules gold coins are classified as collectible and bullion is classified on its own. Collectibles have more stringent rules and rules pertaining to bullion are less stringent.
- The process of acquiring the gold might be slightly different.
The one thing that confuses a lot of people who hold gold in their SMSF are the auditing process and rules. It can be problematic to have your SMSF audited if you keep your gold at an independent vaulting service provider or in a safety deposit box at your bank. The auditor will need to see the gold to verify its existence. There is an easier way to go about it. Find a vaulting service provider that offers tailor-made solutions for SMSFs. There are a number of them located in Australia Service providers like that can take care of a lot from buying, storing, selling, insuring to valuing your SMSF gold. They can also help keep track of documentation that an auditor may need from you.
Decisions regarding storage will be made by trustees. So, is the decision about storage. While gold in SMSFs is a protective asset, it will not generate any income. You won’t get dividends or distributions that could help you with pension payments, for example. However, as gold appreciates in price so will the returns you stand to make in the long-term.