Retirement is a stage that everyone should look forward to. But that can only be possible with financial security in the horizon. There are many investments that can help secure one’s future financially and they include stocks and bonds. However, a lot of people have started adding investment in gold to the mix.
Precious metals investment is considered a wise way of saving for retirement. Many a financial advisor recommends that a portion of one’s savings for retirement should go to investing in this commodity of intrinsic value. It is a great investment asset that can help ensure you are financially secure at retirement. Click here for tips on how to allocate your assets and diversify your portfolio.
In this article, we will look at why you should invest in gold for retirement and also the different ways you can do this.
Why Should You Invest In Gold For Retirement?
Many people have asked this question and truly it’s worth asking. One major point that investment bankers and advisors hammer on is the fact that gold is a safe investment. Despite the fact that the price goes up and down, you cannot really incur loses with this precious metal.
Although the price of this precious metal fluctuates, it has recorded a 225% increase over the last 10 years and more than 500% if we go as far back as 2002. So imagine that you bought an ounce of gold at $200 in 2002, how much is it worth now? If you started your gold IRA in 2002 and you are retiring this year, you certainly should be balling (lol).
Now that’s a summary of the reason you should invest in gold for retirement. Now let’s give you a detail of the pros and cons:-
Withstands Political and Economic Upheavals
The price of gold always tends to go up whenever there is political or economic crisis; at the worst, it is stable. This serves as insurance for the investment of many people. We may know or have heard about the stock market crashes of years gone by with the most recent being in 2020. You can read about it here: https://www.investopedia.com/. Many people lost their investments but those who had gold did not do badly; in fact some people even made profit.
Serves as a Hedge Against Inflation
Following from the first point, it is safe to say that gold serves as a hedge against inflation. There are many ‘expert’ arguments as to the validity of this claim but the truth is that simplistically, this is true. No matter what happens to paper currencies and stocks, this precious metal stays stable.
The Value Appreciates
Truly this yellow metal of great value does not depreciate, rather its value appreciates. This is no doubt as a result of demand and supply. Whenever there is upheaval in the economy, people rush to purchase it. They feel more confident in its stability than paper currencies that can crash at any time. This increases the demand and thus drives the price up.
Can Be Held Physically
If you buy this asset in its physical form (bars or coins), you can always have access to it. Imagine that war breaks out; it automatically becomes difficult to sell your intangible stocks. But that’s not the case with precious metals; with this physical commodity, you have something valuable as a means of exchange.
No Dividends or Interest
Unlike other investment assets that pay out interest and dividends, you can’t make profit from this precious metal unless you sell it at the right time. Many retirees may not want to be saddled with this responsibility.
Requires Storage Space
If you want to stockpile the physical commodity, you must have adequate storage space that’s secure. For a gold IRA, it is illegal to store it privately; it must be in an authorized facility that’s overseen by a custodian which will cost you money. Whichever route you decide to take will pose the issue of opportunity cost. It’s either you spend money on storage facility and not have access to your valuable or spend heavily on security to have it in close proximity.
Different Means of Investing In Gold For Retirement
The following are the different means of investing in this asset for your retirement:-
Investing in a gold-backed IRA is a safe way of investing in this valuable metal for your retirement. This is a self-directed IRA that allows you to invest in the precious metal of your choice. You can find out how to open and fund a retirement account at metal-res.com or other reputable investment platforms.
Invest in Gold-related Stock
You can invest in companies that mine or refine the product. You can also buy gold ETFs and mutual funds. If you are not savvy in this area, you will do well to engage the services of an expert. In fact it is recommended that you do, unless you are really versed in this kind of investment.
Buy The Physical Commodity
This is actually, the most expensive way of investing in this commodity because there are fixed weights and prices. For example, one ounce of gold is sold at $1,700 plus or thereabouts and no one will give you half an ounce. But with stocks, you can get fractions of it; that’s what makes the difference in cost of investing in both types.
In addition to the above, you also have to have adequate storage and security for the physical commodity. This also piles up the cost of investing.
From all that we have discussed on this subject, we believe that you have a basic idea of what it means to invest in gold. Is it a wise financial decision for your retirement plan? We hope this information has started you on the road to determining whether it is a wise financial decision or not.