Australians are always on the lookout for new ways to fund their transition into retirement. Using the superannuation fund to invest in precious metals commodities is a financial channel that many utilize to secure their future, particularly investments in gold.
When it comes to investments in gold, Australia should take cue from Germany’s methods in investing in the precious yellow metal. After all, it is the only country in the 1970s that managed to keep inflation prices in single digits due to its confidence in gold. Back in April, Finanzwelt, Germany’s principal trade publication catering to financial liaisons, featured an article on the nation’s tangible gold investment, this was accompanied by an updated BullionVault Gold Investor Index. This index exhibits buying and selling patterns from this particular online outlet for precious metals exchange. From the trends as evidenced by the index, it would appear that private investors were quite confident with the performance of physical gold. To gain insight on the industry, novice and experienced investors can find more gold advice at BullionVault.
Before making any decisions on how you want to get involved in purchasing gold, the first step to take is to check if your current fund has gold investment options. Some super funds allow for direct investment, meaning that you can purchase gold bars and coins, but other funds are limited to indirect investments. Contacting a financial advisor will help determine whether you should invest in bullion, mining shares, ETFs, or managed funds.
In cases where your super fund doesn’t have a gold investment option, the chances are you’ll have to switch to a fund that does. Many super funds are becoming more flexible with member directed investments, but you should note that you may encounter higher fees than than you’re used to. Brokerage fees are also part and parcel of buying ETFs or mining shares. Plus, there is the possibility of limiting one’s financial portfolio due to “having too many highly correlated assets that move in the same direction”, according to Tony Featherstone of the Financial Review.
The super fund that you can purchase physical gold with is the Self-Managed Super Fund (SMSF). It stores more assets than other super funds, such as corporate, retail, and industry funds. Unfortunately, the conditions and paperwork might be difficult for some to keep up with, especially the government recommendation of a maximum of four members having a combined fund of $200,000. While this may seem like a lot of work, it is still seen as the best vehicle to safeguard your wealth.
There are many more implications that pose a threat to both physical and intangible gold, which is why it’s advisable for SMSF investors to research every detail before adding this yellow metal to their portfolio.
Visit Superannuation Warehouse’s gold investments page for more information on how you can get exposure to the gold market using SMSF.
The content of this guest blog is written by Nicole Smart.