Is Gold a Good Investment for You? 6 Indicators to Help You Choose
The only way to guarantee a sound financial future for yourself and your loved ones is to save and invest. Only through disciplined saving and smart investment choices can you put your money to work for you to build your wealth and ensure financial security. But with thousands of possible investment choices out there, how can anyone determine what to invest in?
One of the keys to sound investment is a properly diversified portfolio. The exact makeup of that portfolio will be different for each investor and will change over time as retirement nears or investing goals change. But a key part of that is hedging against the risk of catastrophic losses.
With stock markets having already experienced two huge crashes over the past two decades, the risk to investors cannot be understated. That’s why many investors protect their investment gains by investing in gold, particularly as stock markets become more and more volatile. With a gold IRA, investors can roll over their existing retirement and investment assets tax-free, locking in gains already made and protecting their assets from future losses.
Understanding the Top Reasons to Invest in Gold
Any investment decisions you make will require careful thought and consideration. You’ll want to speak with experts who understand your investment goals, your timeline, and your appetite for risk. And because taxes are a certainty at some point along the way, you’ll want to make sure that you consult with tax advisors to figure out your tax liabilities and minimize them to the greatest extent possible.
Those same considerations come into play with gold, too. Gold is a good investment that plays an important role in many investors’ portfolios and with many mainstream financial advisors unfamiliar with gold, it’s incredibly important for investors to talk to someone who understands gold. Here are some of the reasons our experts believe gold is a good investment.
1. Gold Increases in Value Over Time
Gold is one of those rare assets that maintains and even increases its value over time. With only a finite amount of gold in the earth’s crust, and very low annual growth in world gold supplies, the amount of gold in existence per capita decreases every year. That, coupled with increased gold demand, means that the value of each ounce of gold increases all the time.
Gold’s purchasing power vis-a-vis the US dollar continues to increase too, as continued inflationary monetary policy results in the perpetual devaluation of the US dollar. As the dollar’s purchasing power continues to decrease, the purchasing power of gold continues to increase.
Since the closing of the gold window in 1971, gold has even outperformed stock markets such as the Dow Jones and the S&P 500. For investors who are looking to strengthen the value of their investments over the long term and ensure that they have enough money to live on in retirement, that makes gold an ideal asset to invest in.
2. Gold IRAs Are a Safe Investment
Another characteristic of gold that makes gold a good investment is its lack of volatility. While stocks are subject to massive ups and downs over the years, gold’s price movements are slow and steady. Investing in gold isn’t for people who want to get rich quick, it’s for those who understand that investing for the future is a marathon, not a sprint. Gold may not be as flashy as hot tech stocks, but 20 years from now it will have continued to appreciate, unlike many stocks that will have fallen by the wayside.
That lack of volatility makes gold a good investment not just for those nearing retirement, who want to de-risk their assets to minimize the possibility of big losses, but it also makes it a good investment for those in retirement, as it provides slow and steady wealth appreciation so that investors can continue to draw on their nest eggs throughout their retirement. And with a gold IRA, investors can benefit not only from gold’s stability but also from the tax advantages offered by an IRA.
3. Gold Is Better in Times of Inflation
Given the stranglehold central banks have on economies around the world, inflation is all but certain nowadays. The prices of household goods and the cost of living will only continue to increase as more and more dollars continue to be produced out of thin air. Investors understand that and understand that loose monetary policy leads to booms and busts in the economy. That’s why they continue to invest in gold as a hedge against inflation.
As the dollar deteriorates in value, gold only continues to increase in value. In fact, there is almost an exactly inverse relationship between the deterioration of the dollar’s purchasing power and the increase in the price of gold. As long as the Federal Reserve continues to keep interest rates depressed and threaten further quantitative easing, gold will continue to rise in price.
4. Diversify Your Portfolio with a Gold IRA
Portfolio diversification is key to good asset performance. But too many people think that they can diversify their portfolios by investing in a collection of stocks, bonds, CDs, and mutual funds. A portfolio of that type is still 100% invested in financial assets that are dependent on the health of Wall Street for their performance.
Proper diversification means investing in a mix of all different kinds of assets, minimizing the risk of exposure to a single currency, single country, or single asset class. That’s where gold plays a role as a good investment to diversify a portfolio. As a hedge against inflation and financial turmoil that often makes greater gains as stocks lose value, gold is the natural choice for those looking to diversify their investment portfolios.
5. Improve Liquidity With Gold IRAs
Another advantage of gold is that it is an incredibly liquid asset. With demand for gold not just from investors but also from jewelers and industry, there is always someone looking to buy your gold. If you need money quickly, you can guarantee that you’ll be able to find a buyer for the gold in your IRA. And unlike stocks, you won’t have to worry about the gold price tanking before you’re able to sell.
When it comes time to take distributions from your gold IRA in retirement, you can choose to take the distribution either in cash or in gold. That allows you to choose between quick money if you need it or continuing investments in physical gold if that’s what you desire.
6. Gold Is an Investment Around the World
Gold’s appeal is universal, with investors around the world always looking to invest in it. It’s not unusual to find American investors who open gold investment accounts overseas in the event they are forced to travel or flee the country, as those gold holdings would provide them with a ready source of income if necessary. Gold is universally recognized as a store of value and as a stable asset, so no matter where you decide to plant your feet in retirement, your gold IRA will ensure that you have a ready and reliable source of income.
Is Gold a Good Investment for Retirement?
No two retirement plans are going to look the same, because individual investors have their own ideas of what they want to invest in. But all the best performing retirement plans have a few things in common. They’re well-diversified, focused on long-term growth, and protect their investors against catastrophic losses. In many cases that means that those portfolios incorporate gold investments as a key part of their investment strategy.
Now that you’ve seen all the reasons to invest in gold, the advantages of investing in gold should be more apparent. Gold is a good investment for those approaching retirement, those in retirement, and even those with years to go before retirement. Your exposure to gold may rise and fall depending on what stage of retirement planning you’re in, but you should always have at least some gold in your portfolio to protect your assets. Talk to the experts at Goldco today to see how investing in a gold IRA can help benefit your investment and retirement goals.