SMSF in Gold Bullion & Silver Bullion
SMSF can be used to invest in gold bullion, silver, and platinum bullion. Many people in Australia are not aware that they can use their self-managed superannuation funds (SMSF) to invest in bullion.
SMSF can be used to buy bullion for investment purposes. That is, if you manage your own superannuation funds which are SMSF (not industry superannuation funds like Sunsuper, HESTA etc) then you can use that money to buy bullion like gold and silver.
A report called Supernomics released by the Industry Super Network on Friday 5th March 2010 showed that Australians will lose $120 Billion Dollars in superannuation funds due to bad investment choices made by the companies who manage your superannuation funds.
A research article published by ABC News titled Retirement savings going backwards on 5th August 2010 on their website said the following:
Australians retirement savings have delivered a net return of just 3 per cent a year over more than a decade, an investigation by the ABC has found. That is barely ahead of inflation which averaged 2.8 per cent over that period and 3.1 per cent over the past 10 years - implying that, system-wide, retirement savings have achieved virtually no growth in real terms said Dr Mike Rafferty, an economist from the Workplace Research Centre at the University of Sydney. At a 3 percent return it is an absolute economic travesty, because that money could be put to much better use.
The ABC has analyzed official statistics from the Australian Prudential Regulation Authority (APRA) on superannuation assets and contribution flows that go back as far as 1997. In the 13 years to mid-2009, the superannuation system delivered an annual compound return of 3.04 per cent. The system-wide returns are significantly less than the money could have earned had it been placed in effectively risk-free investment vehicles such as Australian bank term deposits or Australian government long-term bonds.
Cash in a bank term deposit would have delivered about 4.5 per cent a year on average over that time. Ten-year Australian government bonds would have delivered an average return of 5.75 per cent. The extremely poor returns on workers money garnished under the superannuation guarantee charge raises serious questions about superannuations efficacy as a vehicle for retirement savings. The ABCs analysis shows that although the total assets in the superannuation system have almost quadrupled since 1997, the vast bulk of the growth has merely come from net contributions - workers money going into the system - not the money making money.
As an economist I think I would say it is a scandalously inefficient way of delivering retirement security, Dr Rafferty said, adding and it is also a scandalously inefficient way of saving money at all.
Returns on the major balanced super funds (with a mix of Australian and overseas shares, property, bonds and cash) have delivered an average return of about 4.5 per cent over the past decade, according to credible superannuation analysts such as SuperRatings and Chant West. In practice, that translates into a median return barely ahead of inflation for so-called retail funds run for profit which tend to charge higher fees. Returns have been significantly higher for industry, corporate and public sector superannuation funds not run for profit and with lower fees. But the returns on so-called major balanced funds - low as they are - mask the far poorer performance for the superannuation system as a whole. The system-wide returns are dragged down by funds with very high fee structures, poorly performing schemes and tens of millions of lost or inactive accounts that no longer attract contributions that continue to have their balances eroded by annual fees.
Volatile markets and a perfect storm of financial crises have brought down the returns on superannuation. The period in question was bookended by the Asian financial crisis and the global financial crisis and punctuated by the tech wreck of 2000 and the market ructions in 2002-03 from the accounting scandals at Enron and WorldCom. But market volatility cannot be entirely blamed for the poor returns - someone investing their money in Australian equities over this time would have achieved an annual return more than double inflation at 6.6 per cent. The returns have also been eroded by a sizeable slice of fees taken from superannuation all the way along the line. It is a $1.2 trillion industry and out of that there is about $17 billion in fees that are stripped out of it every year, said Jeff Bresnahan, managing director of SuperRatings. Quite simply, $47 million, $48 million a day coming out of our superannuation accounts to pay suppliers for managing that money.
Important information: The above information is not financial advice. Please consult your independent financial adviser if you are considering investing in gold and silver bullion using your SMSF.