Is Buying Gold a Good Investment?

Home Investing Is Buying Gold a Good Investment?

Is gold over-hyped or is it still a good investment? Here are the top reasons how buying gold as an investment may be a good idea.

Along with the many investments that are available today, investing in gold is still a popular investment for various reasons.

This shiny yellow substance is not only attractive, but it also can retain value when other asset classes fall in value such as stocks and real estate.

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Adding some of this precious metal to your individual retirement account (IRA) may be just what you need for a more comfortable retirement and a great long term investment strategy.

Why You Should Invest in Gold

Gold has always been in demand and will continue to do so. It is admired greatly for its beauty and it has always been used for money for millennia. Gold has been the currency that moved the mark for hundreds of years — as far as 1,500 years ago.

Even today, this has not changed. People still rush to obtain gold when economies fluctuate. There are certain advantages of gold as an investment, here are some of the reasons you should consider:

1. A Hedge Against Inflation

Gold has historically risen in value as inflation increases. This means that when the dollar decreases in buying power, as well as the yield from Treasury notes, gold can still provide you with the stability your retirement account needs.

2. Gold Can Be Used as an Investment

Right now, gold is rather inexpensive. In 2008, it sold for $869.75 per ounce. It hit is high mark just three years later at $1,895 in 2011. With inflation, it is apt to keep on rising from where it is now. It is always advisable when investing to buy low and sell high for the greatest profit. This means gold can keep your investments solid and growing especially in a bear market.

3. Gold Is a Safe Haven

During various financial crises of the past, investors have quickly bought gold when they saw trouble coming. Many of them sold their stock and bought gold.

4. Political Uncertainty

As the world appears to become a more unsafe place, people become afraid of the collapse of their economy. This has earned gold the nickname of “crisis commodity.” During those occasions when things look bleak, gold will often do better than other types of investments.

5. Limited Supply

When the amount of gold available in the world becomes harder to get, the price of gold increases. In recent years, most of the gold made available has come from central banks. This reduction has occurred since 2000, and mines have produced less gold than usual in recent years.

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These five reasons reveal why gold has been and still is a great investment. By adding some to your retirement account, you can grow your retirement faster and provide greater stability for it.

Value of Gold bars

Different Types of IRA’s

When it comes to preparing for retirement, there are two primary types of IRAs. You can put your money into a traditional IRA or a Roth IRA.

  • Traditional IRA – This kind of IRA lets you get a tax deduction (up to a limit) on the money you put into the account. No taxes are paid on the interest until it is withdrawn, but at that time, your taxes will likely be lower. You must start to withdraw money when you turn 70 1/2.
  • Roth IRA – Money put into a Roth IRA is taxed – no deductions allowed. No taxes are paid on the interest as it builds, or when you withdraw it, up to certain limits. There is no mandatory age at which withdrawals must start.

How Does an IRA Work?

IRAs give you a way to save money for retirement and lets you build your savings without paying annual taxes. There is a limit on how much you can put into an IRA: $6,000 if you are under 55 and $7,000 if you are over 55. The interest is compounded, so if you start early, you can have a much larger retirement sum when you reach retirement age.

Precious Metal IRA

There is a way that you can invest in gold and use its stability as a way to reinforce your IRA and protect your retirement. Another kind of IRA, called a self-directed IRA, is capable of enabling you to take advantage of having gold in it. The value of the gold in it is affected by the gold price in the USA.

This type of IRA will let you put gold into it. The gold must be placed into an IRS-approved custodial account. Once you put gold into your account, you can track the value of it by looking at gold futures.

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About the author

Brian Meiggs
Brian Meiggs
Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping you put more money in your pocket. He helps millennials follow the smart money in order to increase their earning potential and start building wealth for the the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Yahoo! Finance, NASDAQ, Discover, MSN Money and more.

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