2022 – A good time to diversify your SMSF with Bullion!

In this article we will explore the different considerations involved with a self-managed super fund (SMSF) and how you can diversify your SMSF with gold bullion.


In Australia we are fortunate to have a superannuation system in place that exists to ensure that we all have the right to control our own destiny and create for ourselves a good quality of life in retirement.

The question is, how can you make the most of this opportunity and establish a foundation of wealth that will sustain you in retirement, and even provide future generations of your family with a legacy they can depend on?

More and more Australians are opting for a (SMSF) to have greater control and diversification in what they can invest their retirement funds in, such as precious metals. Investments that might not be possible with a typical industry superannuation fund.

Private Vaults & Gold Bullion Australia helps this growing number of Australians to purchase precious metals for their SMSF as they are allowable assets within an SMSF.

A superannuation scheme that is diversified across a range of investments including precious metals such as gold and silver does provide peace of mind. That’s why many SMSF investors choose to hold physical bullion in their overall investment portfolios.


The Significance of SMSFs

Compulsory superannuation contributions were first introduced by the Keating government in 1992 as a solution to alleviate the stresses of an ageing population on the Australian economy and expand the opportunity of wealth generation for all. As Mr. Keating explained in an article online, “Back in the 1980s, only wealthy people were in the stock market, but I felt mums and dads should be able to share in the bounty of the wealth of the nation. Owning a home was fine but they needed more.”

So came the introduction of managed funds that were apart of a system designed to be simple, affordable and understandable. However, since the ascension of the Superannuation Legislation Amendment Act in 1999 that introduced SMSFs and Small APRA Funds, more and more people have turned to SMSFs to beat the disappointment of lower than expected returns from managed funds – where risks are taken by managers but the losses are worn by the beneficiaries of the fund.

The Benefits and Obligations of an SMSF

SMSFs affords members ultimate responsibility for their super funds and the ability to closely control how they invest their retirement savings, offering more investment choices, as well as considerable tax concessions and other benefits.


SMSFs are private funds that are regulated by the Australian Tax Office and are allowed up to four members who are the trustees of the fund and may benefit from the ability to pool their assets, purchase property using debt, and benefit from a capped tax concession rate of 15% on income derived from investments outlined in the investment strategy. On top of this, members are permitted to make in specie contributions. This means that, as a member of your SMSF, you may transfer the ownership of shares or property belonging to a business to your fund without selling the asset itself.

As the trustee of an SMSF you are responsible for: setting out and following your investment strategy that meets your retirement needs and accounts for the risk your portfolio is able to handle, researching investment options, managing the fund, budgeting for ongoing expenses, keeping comprehensive records, organising insurances such as income protection and total and permanent disability cover for super fund members, and arranging a yearly audit by an approved SMSF auditor. The question is, how can we make the most of this opportinity and establish a foundation of Wealth that will sustain us in retirement, and even give future generations of our Family a Legacy they can rely on?

By including a broad range of investment options in your investment strategy, this allows you flexibility in what you choose to invest in and the ability to better balance, adapt and diversify your investment portfolio. As the trustee of your SMSF you have the choice to invest in shares, property, cash and term deposits, bonds, property, cryptocurrencies, collectables and physical assets such as gold bullion.


How Do I Make the Most Out Of My SMSF?

A common misconception is that when investing in gold there is no way to get rich, but this couldn’t be further from the truth. Gold and silver are investments which have been around for thousands of years and are considered to be a safe haven during times of economic uncertainty. It is also one of the few assets that has historically increased in value over time. This makes it an incredibly attractive investment option for anyone looking to build wealth or protect their money against inflation.

In this article we will explore how you can make the most out of your SMSF by investing in bullion. We will go through some of the best ways to invest in gold and silver as well as give you some tips on how to manage your SMSF so that you can achieve long-term financial success.


What Is Investing In Gold And Silver?

Investing in gold is about buying precious metal bars like those shown below. These are called ‘bullion’ because they usually contain a large amount of pure gold. They are commonly used as a form of currency and are often traded between individuals and countries. A bar of gold can also be bought at any jewellery store or online retailer.

The price of gold fluctuates daily depending on demand and supply. If demand increases, then the price will increase and vice versa if supply decreases. However, the price of gold tends to follow a pattern of increasing and decreasing prices. When demand is high, the price rises steeply and when supply is low, the price drops. This is why it is important to buy bullion at the right time. Buying when the price is low could result in losing money whereas purchasing when the price is high could mean making a profit.

The price of gold depends on a number of factors such as the current state of the economy, political events, interest rates and other market conditions. For example, the price of gold was very volatile in the early 2000s due to the collapse of the dotcom bubble, however since 2008, the price has remained relatively stable.


Always do your research…

When investing in gold, you should always do your research before deciding where to purchase your bullion. There are many different types of gold available ranging from yellow gold to white gold. Yellow gold contains more copper than the other metals and therefore costs less than white gold. White gold is made up of platinum and palladium and is significantly more expensive than yellow gold.

Gold is not only useful as a form of currency; it is also used in industry and manufacturing. You may hear people refer to gold being used in dentistry, electronics and aerospace industries. Some companies use gold in order to create stronger products such as computer chips and aircraft engines.

There are several benefits associated with investing in gold. The main benefit is that it provides protection against inflation. As mentioned earlier, the price of gold generally follows a cycle of increasing and decreasing prices, meaning that investors who buy gold now will likely see higher returns in the future.


Gold Bullion and your SMSF

As stated in an article published by the ABC, making money out of money isn’t as easy as it used to be. With a low Reserve Bank of Australia (RBA) cash rate of 0.85%, term deposits aren’t making the returns that investors usually rely upon. This is why more and more SMSF members are looking to gold as a portfolio diversifier and an insurance against economic uncertainty and a method for hedging losses. Investing in gold is about owning physical gold bars rather than shares or bonds. It’s also about having some in reserve so that you have something tangible to offer creditors during times of financial distress. In this regard, it is similar to holding cash in your home which would be an acceptable option for most Australians.

However, there are some differences between investing in gold and keeping cash in your house. Firstly, you can store both cash & Bullion in a Private facility, like Private Vaults Australia, which makes a much safer and stress free alternative to keeping it “under the mattress”. Secondly, you don’t need a special licence to own gold bullion. Thirdly, you can make tax-deductible contributions to your superannuation fund. And finally, you can access your Safe Deposit Box (SDB) anytime during business hours.

While you may be 100% committed to your SMSF and building a comfortable retirement for yourself, taking control also means taking appropriate measures in your investment strategy to diversify and protect your portfolio from the risk of possible loss of investments and market volatility.


Investment Strategy

Gold is a physical commodity with inherent value that is held in high regard as a long-term investment option that rises in price as stocks markets drop. Taking into account that we watched the price of gold rise to a near all time high in 2019, have you considered including physical gold in your self managed super fund investment strategy?


When considering physical gold as a part of your investment portfolio, it is important to note that gold bullion is preferable over gold coins because the price of gold bullion is based on the spot price of gold, while gold coins are classed as collectables and are subject to stricter rules because the value of the coin is more complicated to determine.

While it is completely legal for your SMSF to invest in gold bullion, there are a few important considerations to take into account and rules you must comply with. Firstly, and most importantly, gold bullion must be an allowable investment according to your investment strategy.

When purchasing gold bullion the invoice must be made out in the name of your SMSF. Once purchased, members of your fund are responsible for keeping adequate records that prove the existence of the gold bullion, as well as show the decision of where the investment is stored and how it is insured.

For example, it is a requirement that the gold is stored in a secure storage facility and insured for its market value. As stated in an article by the Australian Financial Review, “Whether it’s bullion or it is classified as a collectable, storage and insurance will be top priorities.”

Furthermore, you are required to provide all relevant documents concerning the above to your independent auditor to assist with annual audits of your fund. If you don’t comply with the investment restrictions, the ATO may impose significant penalties such as higher tax rates, and disqualify you as a trustee or even prosecute members.

At Private Vaults Australia we specialise in the purchase and sale of gold, silver & platinum  bullion, offering expert advice on SMSFs purchasing and storing precious metals, as well as complimentary insurance of $20,000 with each safe deposit box lease.

For more info on how to diversify your SMSF with gold bullion, contact PVA or read the PVA blog for more interesting news, tips and ideas to guide you.


Peter Hobson

My background involves the ownership of many businesses including owning and running multiple Chiropractic offices but mainly focused in Nerang on the Gold Coast for 30 Years.

I have a passion for accumulating and holding Bullion and have done so for many years. My extensive Business skills and Bullion knowledge makes it easy to assist others buying, selling and storing their Bullion.

Peter and Cassie work together to assist anyone from the experienced Bullion Investors to the complete novice. They are here to answer any questions to help you.

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