Key questions on superannuation and investing in gold

Investing in gold through superannuation is a topic of interest for investors looking to diversify their portfolios and safeguard their retirement funds. Here are some key questions for you to consider:

1. What is superannuation and how does it work?

Superannuation, often referred to as "super," is a long-term savings strategy designed to help you build a nest egg for retirement. Contributions to a super fund are typically made throughout your working life, either by your employer under the superannuation guarantee scheme or through voluntary contributions. These funds are then invested in a variety of assets to grow your retirement savings. In Australia from 1 July 2024, all employers must pay each eligible employee 11.5% of their ordinary time earnings (OTE).

There are several types of superannuation funds, including industry funds, retail funds, public sector funds, and self-managed super funds (SMSFs). Each type has its own benefits, fee structures, and investment options. It’s important to compare these to find the one that best suits your needs.

2. What are the benefits of investing in gold as part of my superannuation?

Gold is considered a "safe-haven" asset that can provide a hedge against inflation and economic uncertainty. Including gold in your superannuation portfolio can diversify your investments, potentially reducing risk and enhancing returns. Additionally, gold's historical performance during market downturns can offer stability to your overall retirement fund.

Including gold in your superannuation portfolio may offer several potential benefits:

• Diversification: Gold can balance an investment portfolio by reducing dependence on traditional assets like stocks and bonds.
• Long term returns: Investors have long considered gold a beneficial asset during periods of uncertainty. Historically, it has generated long-term positive returns in both good and bad economic times. Its diverse sources of demand give gold a particular resilience and the potential to deliver solid returns in various market conditions.
• Stability: Gold is generally considered a safe haven during economic uncertainties and market volatility.

You can read more about gold’s key role as a strategic asset in the World Gold Council’s latest report: Gold as a strategic asset: 2024 edition

3. Are there any tax implications for investing in gold through superannuation?

Yes, there are specific tax implications to consider. Investments made within a superannuation fund generally receive favourable tax treatment. However, it's important to be aware of the rules and regulations governing these investments, such as capital gains tax on the sale of gold and the concessional tax rate on earnings within the super fund.  We recommend speaking with a qualified financial or tax professional to understand more.

4. How can I include gold in my superannuation portfolio?

There are several ways to incorporate gold into your superannuation portfolio, however you must have a self-managed superannuation fund (SMSF) to be able to invest. Once you open an SMSF account there are three ways you can invest in gold including:

1. Physical gold: Purchasing gold bullion or coins and storing them securely.
2. Gold ETPs: Investing in exchange-traded products like ASX:PMGOLD that track the price of gold.
3. Gold mining stocks: Buying shares in gold mining companies, which can offer exposure to the gold market.

5. What are the risks associated with investing in gold in your SMSF?

While gold can be a valuable addition to your SMSF portfolio, it's important to understand the risks involved:

• Market volatility: Gold prices can be volatile and may fluctuate based on global economic conditions.

• Storage and insurance costs: Physical gold requires secure storage and insurance, which can add to the overall cost of the investment.
• Lack of income: Unlike stocks or bonds, gold does not generate income through dividends or interest, which may impact your overall returns.
  
  

6. How do I purchase gold through my self-managed superannuation fund (SMSF)?

To purchase gold through an SMSF, follow these steps:

• Set up an SMSF: Ensure your SMSF is compliant with Australian Tax Office (ATO) regulations.
• Choose a provider: Select a trusted provider like The Perth Mint to purchase gold bullion.
• Ensure compliance: Make sure that all transactions are conducted according to SMSF rules and regulations.
• Storage Options: Decide whether to store your gold in a secure facility like The Perth Mint Depository or an approved independent vault. Customers who choose to open an account with us will need to undertake thorough Know Your Customer (KYC) processes.

   

By understanding these fundamental questions, you'll be better equipped to make informed decisions about superannuation and gold investments, aligning them with your financial goals and risk tolerance.

We recommend consulting with a financial advisor to assess how gold may fit into your overall superannuation strategy. This will ensure a well-balanced and diversified portfolio tailored to your financial goals.

Learn more about investing in gold at The Perth Mint here.