Superannuation - 2015 Outlook

Since the start of the year gold has risen strongly, as uncertainty around the Greek election, lower bond yields and European QE have all led to increased demand for safe haven assets.

USD gold at one climbed above $1300oz, though it has still pulled back somewhat, whilst AUD gold has smashed back through the $1600oz mark.

The recent strength of gold highlights once again why physical precious metals should be a core holding in any well diversified Superannuation portfolio.

Superannuation is fast becoming the largest source of savings for everyday Australians, and ensuring the money is wisely invested is critical to protecting and building that wealth.

As it stands, the majority of Australians are in either balanced or growth super funds, which, whilst they’ve bounced back in the last couple of years, have had a very poor run of it over the last decade.

The table below illustrates this, highlighting the fact that balanced funds have only risen by 6.54% this past decade, barely ahead of cash, and a long way behind gold.

For what is likely to be one of your most important and largest investments outperforming cash by less than 1% p.a over the last 10 years is disappointing, especially with the volatility along the way.

What makes it worse is that those same super funds are still quite risky, and could easily suffer future losses that are even larger than what occurred when the GFC hit.

As you well know we believe strongly in the importance of gold in any well-balanced portfolio. A well-balanced portfolio such as the permanent portfolio, which is made up of 25% in equities, bonds, cash and gold over the long term has not only matched the traditional superannuation funds, but done so with much less risk.

Over the last decade, the gold backed permanent portfolio has strongly outperformed traditional superannuation funds, and done so with much less volatility.

So what should you take away from this?

For the average investor consider getting a super fund with a decent allocation to physical. If the last few years are any indication, then that allocation will not only likely substantially increase your returns, but it will minimize risk along the way.