Why is it a Good Idea to Invest in Gold as part of a SIPP?

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The Pure Gold Company

03/07/17

 

A cursory look at gold’s established advantages as an investment medium should be enough – gold is a very stable, long-term investment, which means you can rely on it to hold value for a long time. Investing in gold for your Self-Invested Personal Pension is an excellent way to take advantage of this.

 

SIPP investment

Since 2006 it’s been possible to diversify your pension and protect your nest egg by adding gold bars to your pension or self-invested personal pension.

Compared to many of the other investments offered by SIPP providers gold is thoroughly fit for purpose. It holds its value regardless of inflation, is easy to liquidate regardless of the circumstances and is not prone to the kind of sharp crashes that can afflict other forms of investment. While it does not provide income in the form of dividends, gold can be relied upon as a multi-decade investment, and its value has risen enormously since the 1970s.

Whether you’re storing your wealth for your own use or planning to pass it on to your loved ones upon your death. Purchasing physical gold for a SIPP allows you to take advantage of 45% tax relief and rebates from income tax, making SIPP gold investment one of the most tax-efficient ways to invest in precious metals.

 

Why SIPPs?

SIPP investment also allows you to consolidate your finances and investments for greater tax efficiency. The scheme allows you to put your investments into a single “pot” from which income tax is then deducted as a whole, reducing the risk of multiple income tax payments.

In the modern economy, physical gold is a traditional “safe haven” asset, with consistent and even growing value when other commodities and markets fall. Investing in gold insulates your portfolio against economic downturns and market failures in a way few other assets do.

 

A stable investment

As a SIPP investment, gold also carries less risk than the more restrictive investment environments of normal pensions tend to carry. In times of financial stress and economic uncertainty, many other kinds of investments including shares and property may rapidly fall in value, while cash may undergo inflation and become worth less than it was before.

Gold, on the other hand, is consistently valuable thanks to its role as a pure and rare exchange medium, meaning that your gold investments will hold their value.

Indeed, gold may actually increase in value during financial crises as less sensible investors rush to protect their own finances and attempt to buy more gold. This effect can be seen around the 2008 financial crisis. Gold prices spiked during this time, and have remained high since, returning to a much higher “normal” level than before.

Other elements you can put into your SIPP include shares, exchange-traded funds (ETFs), unit trusts, Open Ended Investment Companies (OEICs), gilts and corporate bonds and straight-up cash. An ideal SIPP will contain a wide selection of these in order to ensure it is insulated from risk.

 

How to invest in gold for a SIPP

First, it’s important to make sure your SIPP supports gold investment, as not all the SIPPs on the market do. Secondly, gold should not comprise your entire SIPP. it’s a better idea to use it as a stable base on which to build riskier investments.

Once that’s done, make sure you let your Pure Gold Company adviser know that you intend to buy physical gold for your SIPP, and that you’re clear on the storage and holding arrangements. The Pure Gold Company will ensure that the gold you purchase matches the requirements of SIPP investment, and then provide you with further instructions on purchasing and storing your gold.

You’ll find a comprehensive guide to physical gold and SIPP investment from The Pure Gold Company here.

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