Should I Put My IRA in Gold?
Investing your IRA in gold requires careful consideration and knowledge of its benefits and drawbacks, and consultation from an advisor who understands your retirement goals will assist in making an informed decision.
An Individual Retirement Account (IRA) allows investors to invest in physical gold and silver without incurring additional fees from dealers, custodians and depository. But please be aware that such investments come with additional costs associated with dealing with dealers, custodians and depository services.
It’s a safe haven
Gold has long been seen as a safe haven asset, offering protection from economic and political turmoil. Indeed, during periods of instability gold has proven its resilience – yet this doesn’t come with any guarantees attached.
Over the past two decades, gold has only outshone the S&P 500 26 times out of 65 years – likely because as an investment asset its returns can be unstable and unpredictable.
Gold should not be avoided altogether; rather it should be included as part of an investment portfolio. Most financial advisors recommend allocating between 5%-10% of your portfolio to gold as an effective hedge against stock volatility. Request a free investor kit today to learn more about adding it into your strategy! Investing in gold can provide your portfolio with additional protection while protecting itself from fluctuations. Be sure to conduct proper research prior to making any decisions!
It’s a store of value
Gold has long been recognized as humanity’s go-to store of value. Due to its limited supply, scarcity, and resistance to debasement, it serves as an effective long-term wealth store. Furthermore, unlike paper currencies which may experience inflation over time, its worth remains constant regardless of monetary policies, geopolitics or economic conditions.
Gold investments can serve as an excellent diversifier to your portfolio, thanks to their low correlation with stocks and bonds. Their low correlation means they can help cushion against market volatility or economic stress as well as act as an effective hedge against inflation or currency fluctuations.
As part of your retirement savings plan, gold investments should be carefully allocated according to your investment objectives and time horizon. Starting off small (5-7%) can help build a solid base. As interest rates rise, more investors will likely move away from bonds into alternative asset classes like gold – this trend may further drive an increase in demand.
It’s a diversifier
Gold has long been considered a valuable diversifier when combined with other asset classes like stocks or bonds. Due to its low correlation with equity-like returns, gold can help your portfolio reduce volatility during market crashes by spreading risk among different asset classes.
Gold can also act as a defense against inflation. Gold has proven itself a highly reliable inflation hedge over the years, performing admirably both during periods of high and sustained long-term inflation. Due to its physical characteristics, stable demand rates, and limited supply, investing in gold during inflationary periods is an ideal decision.
Given that the Federal Reserve’s efforts to combat inflation by increasing interest rates have made yield-paying Treasurys appear more appealing than gold – which does not pay any interest – which has reduced investment activity recently. Still, gold remains an integral component of a well-balanced portfolio and can provide essential protection from unexpected inflation and geopolitical risks.
It’s a hedge against inflation
Gold can be an excellent way to protect yourself against inflation. Due to its low correlation to stocks, bonds, and other assets, its low correlation helps shield your portfolio from sudden price swings that could impact returns – especially during times of economic strife like Covid-19 pandemic or when recession strikes.
Gold has not had an impressive track record as an inflation hedge; in some periods of high inflation it has underperformed other investments (Salisu et al, 2020).
Gold has an attractive combination of physical properties and limited supply, making it an attractive investment during times of inflation. Gold can help offset devaluations in savings and equities as its value tends to increase with that of the dollar; unlike fiat currencies which rely on governments or companies maintaining its worth, making gold an appealing hedge against rising inflation for many investors.
Categorised in: Blog