Australians love Self-Managed Super Funds (SMSF’s) for a number of reasons.  Firstly Australia being “the lucky country” has enjoyed a healthy environment resulting in a $2 Trillion savings pool which is projected to rise to $9.5 trillion in twenty years*.   The Australian Superannuation system is quite unique and a somewhat generous tax environment that encourages us to save for our retirement (all be it that the generosity is diminishing for some).

Considering this,many Australians dream of being self-funded retirees and are working towards that goal with well thought out plans and transition to retirement strategies. SMSF’s are often viewed as a vehicle by which to get there faster, Trustees can have more control compared to other Super vehicles such as retail and industry funds as the SMSF environment allows trustees to invest in many types of asset – even property, collectibles and gold.

Exactly what a SMSF can invest in must be carefully considered in line with SIS legislation and the Trust Deed of the SMSF.  There are certainly some restrictions around particular assets, for example there must be an investment strategy and an insurance strategy for a start.

As a Trustee, if you are interested in holding precious metals as an asset in your SMSF, there are a few things to consider first with the help of your accountant, financial adviser and even your lawyer:

–          What the Trust Deed allows

–          Types of precious metal and items

–          Storage arrangements that meet legistlative requirements

–          Insurance requirements and costs

If you have been able to satisfy that the Trust Deed allows investment in precious metals, the next step is to analyse the requirements as far as type of precious metal, how to store it, what reporting and insurance is required and what the costs will be.

At Gold Bullion Australia (GBA) we have many clients buying bullion, coins and other types of precious metals for their SMSF.

Types of precious metals

Pool allocated gold is one option that has been popular as it is the most cost effective way to purchase given there are no storage or insurance fees.  Investing this way could be compared to purchasing a share in a managed fund where you are allocated a unit although it is not specifically identifiable by unique a number. Purchasing pool allocated gold is stored at the custodial facility and insured at no cost as the custodian hedges stock holdings and is responsible for the protection of the asset.  Being in a “pool” means the investor can easily add to or liquidate the assets, at GBA this can be done online 24/7 which is popular for trading.  However, some experts view that the “unallocated” nature is not ideal for SMSF where ownership is paramount.

Bullion is a popular type of precious metal for SMSF as it comes in a range of weights, brands and types including serialised and non-serialised, cast and minted.

There are limitations around other types of precious metals, for example legislation allows the trustees to invest in coins however the sole purpose test does not allow the coins to be displayed by the trustee.  Also coins that are considered collectables – i.e. their value exceed their face value and traded above spot price of their metal content –  must comply with specific regulation as a collectable.

The team at GBA can help answer your questions regarding precious metals, vaulting and pricing.  We are not licensed to provide financial advice nor do we understand your specific circumstances.  For information regarding your Super, whether you can have a SMSF or whether your SMSF can invest in precious metals is best dealt with by a financial adviser who understands your goals and circumstances.

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