Purchasing Power Preservation
In April 2005, when I turned 50, I perhaps stupidly cashed in my 3 x Private Pensions, taking the maximum 25% Tax Free Cash Lump Sum.The 75% Balance had to be converted to an Annuity. I selected Legal & General
I said stupidly, since on 5th April 2006, just 1 year later, the UK Government introduced many changes to Pension Rules.
As I was no longer living, or working in the UK, (having lost my job with Netrix Corp. then later Congruent International Inc.) I was not eligible for UK SIPPs Pension.
However I would have been extremely interested in QROPS, whereby I could have transferred all 3 x Private Pensions into say a HONG KONG Pension Plan thet complied with QROPS requirements.
My £300 per month Annuity from Legal & General would give me more than Php32,000 in 2005 when the Exchange Rate was GBP1 = PHP105
Today the Exchange Rate is only GBP1 = PHP66.5 so I have lost 1/3 of my Annuity Value in Peso Terms. What is more is Inflation over the last 7 years, particularly introduction of 12% VAT, diesel Fuel risen from Php14/liter to Php85/liter, Electric bills of under Php3,000/month is now nearly Php7,000. Water has also doubled in price and also bottled LPG.
In short one now need Double the GBP funds to maintain the same Purchasing Power as one had in April 2005.
So how can one achieve /maintain good Purchasing Power?
My advice is to build up ones Personal Pensions for 10 years before retiring to the Philippines if at all possible.
The best way to do this is via SIPP and find a SIP Broker that allows Gold and/or Silver Bullion as a SIPP asset as one investment element.
Why Gold as an Investment Asset
Because Gold is traditionally a wealth preserver, 'hedges' against inflation and devaluation of paper currency, especially in times of economic crisis.
However since USA unilaterally terminated the convertibility of the US Dollar to gold in 1971, under President Nixon, the USD became a 'Fiat' or national Currency, gold has climbed in spurts, ever since.
The increase since 2003 has been an upward 'trend', reaching an all time high in August 2011 of $1,889.7/oz. it is now down to about $1,642/oz
Had I bought 1oz. of Gold ($428) in April 2005, it would have quadrupled in value by today, some 7 years later.
Think about a significant portion of your SIPP Pension Plan having quadrupled in 7 years before you retire. I would still have Double the Purchasing Power, instead of half.
Had I also been buying Gold through a UK SIPP and not getting the UK 40% Tax Savings on its purchase, it would still have been a good deal.
Some would rather invest in Stocks & Shares. My exposure to such has been a disaster.
I was given Shares in Netrix Corp whom I worked for. Then after being made redundant, we were told we had to sell them or we would lose them. They were Paper based Shares, and I needed a Broker to take delivery of such. It was also difficult to sell that Share Certificate so I bought Stock in two other Telecommunication Companies that were doing reasonably well. Lost the lot as there was Class Action Law Suit against one, and the other re-acquired shares and then ceased trading them publicly! The Broker was selling my Shares, to pay the Fees!
A 'Bet' that The Motley Fool posed to it's reader in 2005
Some would rather invest in Stocks & Shares. My exposure to such has been a disaster.
I was given Shares in Netrix Corp whom I worked for. Then after being made redundant, we were told we had to sell them or we would lose them. They were Paper based Shares, and I needed a Broker to take delivery of such. It was also difficult to sell that Share Certificate so I bought Stock in two other Telecommunication Companies that were doing reasonably well. Lost the lot as there was Class Action Law Suit against one, and the other re-acquired shares and then ceased trading them publicly! The Broker was selling my Shares, to pay the Fees!
Google or Gold?
How would an ounce of Gold, as an investment asset, in ones IRA portfolio, perform against traditional Shares?
"Would you rather own a share of Google or an ounce of gold?" I asked at the time. "Here's the stipulation: You have to put your choice under a mattress for the next 10 years. That's right. I'm taking something as volatile as Google and as cyclical as a gold coin and forcing you into a long-term commitment."
A Share in Google Inc. [NADDAC: GOOG) v. 1 ounce of GOLD
You still want to bet on Google improving significantly and/or the price of Gold to crash down to below $700/oz, so Google (The Tortoise) might have a chance to beat (the Hare) 1oz Gold Price, that is way out in front in this Motley Fool Race?
Having Gold in ones IRA portfolio (as permitted by the IRS) can give a certain 'edge' over other traditional assets such as Stocks, Bonds or Mutual Trust Funds.
That example of the increase of Gold/oz price, compared to Google Inc. Share price, hopefully demonstrates the potential of a Gold IRA.
Switch some into Silver, if the Ratio (currently about 50:1) widens also.
Here is one Company offering sales of Gold to individuals and has a partner to Broker Gold SIPP
The Share Price of Google Inc. (NASDAC: GOOG) was $428.62 on 25th November 2005.The Motley Fool Bet is not closed, since it expires on Nov. 30, 2015.
In comparison, Gold was traded for nearly $500/oz, on that same date.
The Google Inc. share price, is currently $606.07 today, having reached $714.87, on 07 December 2007. That 'Peak' is an increase of 66.8% from that Dec. 2005 price, and a drop of nearly 18% from it's 'peak'.
From 25th November 2005, to April 2012 saw a $177.45 increase. That is 41.4% increase over approximately a 6.5 year period; an average improvement of about 6.3% pa.
Gold is currently $1,651.64/oz today, having reached an all-time high of $1,889.7/oz. on 22 August 2011. Gold achieved an increase of 278% from Dec. 2005 to that 'Peak', and a drop of just 12.6% from that 'high'.
An increase of $1,151.64, or 230%, over almost 6.5 years, gives an average of 35.4% pa. improvement for 1oz of Gold.
You still want to bet on Google improving significantly and/or the price of Gold to crash down to below $700/oz, so Google (The Tortoise) might have a chance to beat (the Hare) 1oz Gold Price, that is way out in front in this Motley Fool Race?
Having Gold in ones IRA portfolio (as permitted by the IRS) can give a certain 'edge' over other traditional assets such as Stocks, Bonds or Mutual Trust Funds.
That example of the increase of Gold/oz price, compared to Google Inc. Share price, hopefully demonstrates the potential of a Gold IRA.
Switch some into Silver, if the Ratio (currently about 50:1) widens also.
Here is one Company offering sales of Gold to individuals and has a partner to Broker Gold SIPP
Buy gold for your UK SIPP retirement plan from our partner SIPP specialist,
Berkeley Burke.
Berkeley Burke.
They can also offer Gold IRA for those in the USA
Gold & Silver Individual Retirement Accounts
A tax efficient way to hold precious metal in your IRA
The Entrust Group, which is one of the leading providers of account administration services for self-directed retirement plans, has worked with a well established self-directed custodial account provider, The Kingdom Trust Company, to create a precious metals facility for Individual Retirement Accounts ('IRAs').One of the ways this IRA facility can be used is to hold gold, silver, platinum and palladium with GoldMoney.
Precious metals are a good way to preserve your purchasing power and optimise your investments. Our customers can easily purchase and hold precious metals at low cost, which we then store for them in secure, allocated storage. Our US customers can take advantage of these same features in their IRA.
More information
To open a self-directed IRA or to learn more about this process, please contact an IRA specialist at 1-800-392-9653. You may also email any questions or inquiries to PreciousMetals@theentrustgroup.com or visit the website of the The Entrust Group.
