If there was anything that most people learned last year was that nothing lasts forever. We live in a state of perpetual impermanence which is why it is important to plan for the unknown future. During the 2008 financial crisis, we learned that the old save cash in the bank for rainy days method of planning for the future does not work. Banks can fail and so when saving for the future one has to do some serious due diligence. It is prudent for any investor to maximise their investments. The best strategy is to combine gold investments and self-managed superannuation funds (SMSF) when planning for your twilight years.
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What exactly is a SMSF?
An SMSF is a special purpose vehicle that holds assets in trust of certain individuals usually family members to provide them benefits for retirement. A dedicated Members of the fund is usually the trustee of the fund where as other members are beneficiaries of the trust.
Members will look at various investment opportunities they can use to maximize returns. Many fund managers find themselves wondering about the wisdom of diversifying their investment portfolios by investing in gold. They choose gold because of the number of advantages that aren’t found in a lot of other investment classes.
What are some of these advantages?
Gold is money
For Millenia, gold has been used as currency. It has been regarded as a store of value for more than 3000 years. Gold stores its value better than most currencies in the world. The price of gold might fluctuate daily but it keeps it has kept its value over a long time.
Gold is tangible
Gold is a tangible physical asset you can hold in your hand. It is durable and virtually indestructible, Unlike a lot of commodities, gold does not need to be maintained or fed, or taken care of. You can buy it, store it, and never need to see or handle it for years. Because of its rarity and it has inherent value that other commodities do not have. It does not come with the other risks that paper currencies carry.
Gold does not have any counterparty threat
In the 3,000 years that gold has been used to store wealth, it has never dropped to zero. This is important considering how even the most powerful companies have been brought to their knees when they found themselves in corporate scandals. Banks have fallen too and had to be bailed out. Gold on the other hand can never go bankrupt. With SMSF gold bullion investors know that their money isn’t tied to the success or failure of any company, bank, or other financial institution.
Gold is easy to liquidate
Gold can be sold virtually anywhere in the world. You can walk into any gold dealer’s store with your Australian Kangaroo or Krugerrand and walk out with cash in a matter of minutes. It would take you days if not weeks to sell off your stocks and bonds to get some cash.
Gold is an excellent hedge against inflation and economic meltdowns
The gold price usually goes in the opposite direction to the share and stock market so, if the market is performing badly that is good news for a gold investor. Gold is a safe haven in inflationary economic climates and with SMSF gold bullion, superannuation fund members can have the assurance that there will be money for them when retirement eventually comes along.
