Investing in gold
has long been a popular choice for investors seeking to diversify their
portfolios and protect against market volatility. Self-managed super funds
(SMSFs) have become increasingly interested in investing in gold as well, due
to the potential benefits of such an investment. This article will explore the
reasons why SMSFs are investing in gold, while also considering some of the
risks involved.
Diversification
Gold has traditionally been seen as an asset that is a safe haven during times of economic instability and can hedge against inflation, particularly when other investments may be performing poorly. As such, it provides SMSFs with an efficient and cost effective means of increasing portfolio diversity. Gold investment also carries certain tax benefits for SMSF holders. The Australian Taxation Office allows income from gold investments held by SMSFs to be taxed at 15%, compared to the higher rate of 45% on normal taxable income. This makes gold an attractive option for those wishing to reduce their taxation liabilities while diversifying their investment holdings.