1. WHY INVESTING IN PRECIOUS METALS USING SUPERANNUATION MAKES SENSE
Used effectively, superannuation is the ultimate long-term savings vehicle, giving Australians the opportunity to build up a significant pool of funds, which they can enjoy in retirement. Superannuation has many benefits, including significant tax advantages whilst you are working. Better yet, when you retire, all the assets accumulated to that date in your superannuation become tax-free. These tax advantages can be worth tens of thousands of dollars. As physical gold, silver and platinum are the ultimate longterm savings assets, many investors look to ensure their superannuation portfolio has a healthy allocation to precious metals as well as more traditional assets such as shares and bonds. Some of the reasons to include gold and silver in your superannuation portfolio include:
• Gold returns have been very strong these past 10 years, up over 10% per annum, outperforming the median balanced growth superannuation fund, and some of their underlying assets, as you can see in the table below:
• Performance over the long run (+40 years) has also been strong, with gold returning 9% per annum on average. This is relevant as most people will have money invested in superannuation for 40 - 50 years
• Returns for gold and silver tend to be even stronger when ‘real’ interest rates are low, like they are today. In environments like this, gold prices have risen by over 20% per annum on average, outperforming more traditional investments like shares and bonds, as the table below highlights
• Gold and silver are uncorrelated to equity markets. This means, when the stock market (where most superannuation money is invested) falls, gold tends to rise, often substantially, as the table below highlights. A healthy mix of both stocks and gold often leads to better overall portfolio returns, with less risk of your portfolio falling along the way
• Gold and silver are an easy way to benefit from the rising wealth of both China and India. These two countries are already the largest gold buyers in the world, and demand has risen alongside the growth in per capita incomes, as the following charts from the World Gold Council show. With high savings rates, favourable demographics and rising incomes, demand from both countries will continue to strengthen in the coming year
Introduction: Benefits of buying bullion in your SMSF
As the main vehicle for saving and preserving your wealth as the sole means of support for you in your retirement, the cornerstone of any super fund must be balance. We all recall visions of retirees in tears after the GFC as their sole source of income went up in smoke overnight.
Balancing your wealth is about having a portfolio with assets that are not correlated or that act counter-cyclically. Shares and property can crash together whereas gold and silver bullion can be where the money flees to in times of such crisis, sending their price up. Waiting until then is too late.
Since the GFC we have not actually seen Governments fix the core issues of what caused our last big crash. Indeed we have more debt and more artificial economic stimulus happening in the global economy than ever before. We have share markets inflated by printed money and property inflated by record low interest rates. Conversely, we have gold and silver, traditional safe haven or defensive assets, at prices coming off cyclical lows.
Gold, silver and platinum bullion are allowable assets in your SMSF.
By placing a percentage of your SMSF investments in real, physical gold, silver and platinum bullion you are balancing your risks. You are also getting some of that money you will rely on ‘out of the system’ – no piece of paper saying you own something out of your control.
Finally, silver, gold and platinum bullion can be bought in all shapes and sizes. Buying smaller size bullion bars means you have a very liquid asset you can sell as you need to in smaller amounts if you so desire. Unlike property or other large hard assets, bullion is divisible, giving you ultimate flexibility to sell just what you need, when you need. That might for instance be a bar every week or month during your pension phase as a form of income.
With the right help, SMSFs can be easy to operate, cost effective, and bring a wealth of advantages. Indeed, you might be surprised to know that SMSFs are the fastest growing and largest segment of the superannuation industry. Over 1 million Australians now choose to ‘self-direct’ their retirement funds, and collectively control over $600 billion. You will be in good company if you join this group. The major advantages of having a SMSF include:
• Investment Flexibility: Traditional superannuation funds are limited with what they will let you invest in. For example, you cannot own physical gold and silver, even though they have outperformed traditional superannuation funds and their underlying assets over the 15 years to end December 2014. It is not only physical precious metals that are allowed in a SMSF, but also other investments like boutique share funds, property, and art. Having a SMSF gives you the flexibility to invest in a much wider range of assets, which can help boost returns and manage risks
• Cost Savings: According to Rainmaker Research, the average Australian could pay up to AUD $175,000 in superannuation fees over their working life, possibly more. For a couple, the total fees will be closer to AUD $350,000, and you will be charged even more in retirement, especially if you stay in a traditional pension. ABC Bullion has a SMSF solution that can be run for as little as AUD $1,175 per annum, including administration and auditing. Over a 30-year period, that is a saving of around AUD $130,000 for an individual, and over AUD $300,000 for a couple.
• Control: In a traditional superannuation fund, the company managing the money is the trustee, meaning they, not you, have legal control of your assets. With a SMSF, legal control lies in your hands
• Tailored Insurances: Holding insurances inside superannuation can be a great way to free up cash flow. The problem is that insurances within traditional superannuation are not tailored to your specific needs. With a SMSF, you can customize an insurance solution that works best for you and your family
• Involving the family: One of the biggest advantages of a SMSF is the opportunity to have up to 4 members. This means that you and your partner can combine your assets into one fund, and potentially your children or siblings as well. This allows for even greater fee savings over time and gives you a larger pool of assets to invest with Superannuation is by far the largest financial asset most Australians will build over their working lives. Having your own SMSF, controlled by you, and built for your specific needs (rather than you being just one of tens if not hundreds of thousands of members of a larger fund) can be a great way of maximizing this key asset.
How To: Purchasing bullion in your SMSF
* Buying bullion for your SMSF
As with any purchase of bullion from Jaggards, doing so couldn’t be easier! Simply follow the steps below:
- In order to purchase in your SMSF, you firstly have to have your own SMSF set up. We do not set this up for you.
- Once you have your SMSF, you can purchase bullion through it. In order to so so, you will need to register with us (set up your account).
To register (create an account), we require your details, personal ID, trustee documents and, if any, ID for anyone on the trustee deed.
We need the first page (the name of the trust) and last page (the signature and name of trustees) of the trustee deed documents
Once your account has been created, you can purchase as much as you wish through your SMSF.
Once you have purchased items for your SMSF, you will need to purchase insurance for the items and store them in an insured safe whether this is privately or at your home.
We provide storage with a complimentary $10,000 insurance, if any further insurance is required, this can be purchased in a jewellery’s block of $100,000
* STORING BULLION FOR YOUR SMSF
There are a couple of things to consider when it comes to storing your SMSF bullion. Firstly if you have bought bullion coins they are deemed to be a ‘collectable’ by the SMSF regulations and need to be insured in the fund’s name, stored independently in a secure facility and regularly audited. Gold and silver bullion bars do not get captured by these regulations however you should check with your SMSF manager as some still believe independent secure storage is required. We are not advisors in that regard.
That said, many customers use our Vaulting services in Sydney for storing their silver and gold bullion for a number of reasons:
1. It is the ultimate in independent ultra -secure storage in Sydney at very reasonable prices
2. It removes the personal risk of storing at home
3. It provides additional insurance cover at prices a fraction of what you can get independently. It is very difficult to get insurance in your home and banks don’t offer it.
4. Jaggards delivers your purchases free of charge and fully insured to the Vault for you.
5. You are able to sell back to Jaggards directly from the vault without having to bring your goods into our store.
* SELLING BULLION FROM YOUR SMSF
As mentioned above, a key advantage of gold, silver and platinum bullion in your SMSF is its flexible liquidity. Sell how much you need, when you need to, without fuss. Just as we sell silver, gold and platinum bullion we also buy it back. We issue invoices for all items, so you have a clear paper trail for your records. Simply walk into our store and sell it, or if you have a storage account simply instruct us to sell how much you want and we will deposit the funds immediately into your nominated account. If you have bullion stored at our vault you don’t even need to come into our store. Simply phone us and we will arrange collection directly from our vault once you hand it over to them, and again we will just directly transfer money to your nominated account.
* SETTING UP YOUR SMSF
Please note - Jaggards does not setup or manage your SMSF. We purely sell gold, silver and platinum bullion that you are able to purchase in your SMSF.