Is it wise to invest in gold?
This week the Royal Mint announced it will offer the opportunity for investors to own gold bars within their pension funds. Gold has been eligible for investment in SIPP’s since 2014, however this is the first time you can invest Royal Mint gold. Is this a “golden opportunity” for your retirement plan?
This does not constitute advice and advice should be sought in all instances before acting on it. Our firm can not offer investment advice on real assets such as gold.
Royal Mint gold bullion – 99.9% purity
It has been possible for some time to purchase gold from the Royal Mint. However, it was not an option to invest it as part of a Self-Invested Personal Pension. Well, soon you can.
To invest gold bullion in a pension fund, it needs to be verified at least 99.5% pure gold.
The gold offered by the Royal Mint is 99.9% purity value so more than meets requirements.
Investors will soon be able to purchase gold bars with weights of 100g or 1kg, or, even buy fractional amounts of larger bars. Their investment will be stored at the Royal Mint, which is guarded by the Ministry of Defence, in South Wales.
There will be a maximum charge of 1% per year to own the gold bars, and VAT also applies.
Under legislation, within the safety of the pension wrapper, investment in gold is protected from Capital Gains Tax, however, tax applies as usual on withdrawals.
Is gold a good investment?
As with all investments, careful planning in line with personal objectives and budget helps to reduce the risk of making a poor decision.
Any investment in gold bullion would need to tie-in with the rest of your retirement plan if it were to sit within a pension fund.
Experts warn that gold can be difficult to value, and it doesn’t provide income for investors, like shares and bonds do. Seasonal demands for gold can also apply.
The price of gold increased exponentially in 2000/2001, from just under $300 per ounce to over $1,800.
Now it is estimated to have fallen to approximately $1,250.
Gold to protect against inflation and collapsing markets
Those investors who choose gold as part of their portfolio, are typically doing so to protect against inflation effects, or, the future devaluation of stocks and shares, which are vulnerable when markets decline or collapse.
With the economic outlook suspected to continue improving, most investors are likely to stick to investing in high quality stocks and shares that provide an income stream, as well as asset growth.
However, those who want to diversify and not keep all their eggs in one basket may want to consider this new opportunity.
An investment adviser will be able to advice how much of your portfolio should be kept in gold and also advice on alternative ways to invest it too, such as Exchange Traded Funds (ETFs).
Need sound investment advice? Speak to Darren
Dental & Medical Financial Services help doctors and dentists with retirement planning and investment advice. Speak with Darren to discuss your bespoke goals.
Tel: 01403 780 770