Can your Super Fund invest in precious metals?
Precious metals have proven to be a popular asset to act as an insurance policy for wealth preservation throughout history. So how can you invest in gold, silver and platinum for your retirement portfolio?
A self-managed superannuation fund (SMSF) allows Trustees to choose the assets to suit their risk profile and investment strategy. Superannuation protects your wealth and assets until the day you retire and a SMSF allows you to choose how you manage for your retirement saving.
GBA has many clients who have invested in precious metals as a strategy to preserve the value of their retirement fund using their SMSF.
Safeguarding your future
The importance of a diversified portfolio
Precious metals are an asset many investors seek when economic markets are uncertain. Why is this so?
Gold is an insurance policy that can preserve wealth. It’s like a rainy-day fund to protect you against falling real estate prices, sporadic inflations, and volatile global market conditions. You may also increase your wealth along the way if gold or silver appreciates as it has done for the past decade.
- Unlike other investments, gold, silver and platinum will always be considered precious.
- Physical precious metals have no 3rd party risk
- Bullion is a great tool to diversify your portfolio and protect your wealth (insurance) – precious metals have a longstanding track record
- There is potential to see a higher return on your investment, if and when the value appreciates.
What type of precious metals are most suitable for SMSF's?
There are a number of things SMSF Trustees should consider when selecting the most appropriate assets for their SMSF portfolios:
– liquidity & ability to quickly buy and sell
– correlation to other assets in their portfolio
– asset’s purpose such as a crisis or inflation hedge
– fees & costs such as audit & insurance
To address many of the points above, a logical choice to invest in precious metals for your SMSF is to choose a Pool Allocated product.
How to invest in precious metals using my SMSF
If you are the Trustee of your SMSF you have the ability to add precious metals as an asset to your investment portfolio, although there are a few things to be aware of before you do.
The type of precious metals
Not all products are allowable, for example, some coins and unique items where the face value exceeds the metal value would be considered “Collectible” and are therefore not permitted as an asset. Bullion bars, bullion coins and Pool Allocated products are the most popular.
Where the assets are kept
As the Trustee, you are responsible for ensuring all assets are securely protected. While physical precious metals can be kept at home, it is generally recommended they are stored in a dedicated vault service.
Reporting & Auditing
For each Financial Year the auditor of your fund will require a resolution as of 30 June which confirms:
- Inventory on hand including the type and quantity of precious metal
- Details of insurance including correct replacement value
- Storage details to prove the assets are not available for personal use by the members of the fund
For more information please contact our team