What Happened To Gold And SMSF’s In 2020

Saving for your retirement is important. There are various ways that you can go about doing it but the Superannuation is a common way. Superannuation is compulsory for most people who are tax-paying employees. The employers will set aside a percentage of your salary and put it into a super fund to have financial support on your retirement.

How does it work?

If you are an 18-year-old employee who works more than 30 hours a week and you earn over $450 a month, your employer is obliged by law to pay 10% of your earnings into a super fund. Once your fund receives your contributions, it looks after the money until you retire.

A Self-Managed Superannuation Fund (SMSF) is exactly what the name implies – A Do-It-Yourself super fund. This is a superannuation that you as a member control. You make the decisions on how you want your money to be invested, you can also buy SMSF gold bullion or contribute more. These sorts of decisions have certain tax implications-paying more or including gold in your portfolio could potentially mean less tax – so you will have more money when retirement comes along. A popular reason for setting up an SMSF is that you aren’t limited or affected by the poor performance of a lot of public funds that exist in Australia and you can always choose the best financial planner or accountant to handle your investment portfolio.

According to the Australian Taxation Office (ATO), there are over 600,000 SMSFs in the country with over 1.1 million members.

Getting the most out of your Super

The primary motivation why people choose Self-managed Superannuation Funds is control. When you have control over your fund, you can decide how to diversify your investments. You want to buy SMSF gold bullion because it is a great hedge against economic or political risks. Gold has intrinsic value that fiat currencies don’t have. The price of gold rises in inflationary economies. It has been a valuable asset for many centuries.

Gold has the ability to balance out portfolio returns. It can do this because it has negative correlations to the equity market. When equities fall, the price of gold rises. For instance, in 2020, the Australian stock market plunged 30% in a single month because of fears around COVID, the price of gold rallied by more than 20% which helped protect investor portfolios and in particular those who had gold in their SMSFs. In 2020, gold was arguably the highest performing asset, because it is largely uncorrelated with other types of equity. In the months that global equities and Australian shares fell, the price of gold in AUD rose.

But how much gold should investors add to achieve the maximum benefit?

Economists and financial planners advise that investors should hold 2-10 percent gold in gold to get the maximum benefit from their investments. You can then mix your investments to include property, equities, fixed interest, etc.

Self-Managed Superannuation Funds allow you to structure you’re your pension features to line up with your goals and objectives. Another reason many investors include a permanent allocation to gold – safety and health returns.