With stocks falling and gold starting to rise, is now a good time to invest in gold?

August 31, 2012 By Leave a Comment
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In this economic downturn, many investors are beginning to worry about their investments in assets such as real estate and the stock market. With stock prices plunging in an extremely volatile environment, investors are looking for new and more reliable assets in which to invest. Less risky investments are needed in order to build financial portfolios and gain money from investments, especially in regards to retirement funds such as IRAs and 401ks.

Gold is a precious commodity that has steadily been increasing in price and value over the years. In fact, the past decade has shown a 300% increase in the price. The reason for this is due to the US dollar becoming weaker and weaker. Since gold is bought and sold in US dollars, the decrease in value of the dollar is making gold become more expensive. In addition, the demand for gold is increasing, which in turn drives prices higher.

As mentioned before, investors are looking for less risky assets to be a part of their financial portfolios. Many of them choose gold as a non-traditional asset due to the benefits, such as its ability to hedge risk in your portfolio. How does it hedge risk, you may ask? Well, for starters, it can be liquidated for cash. Gold is increasing in price; therefore, when you decide to sell, you will receive a higher ROI. Also, gold has outlasted many other types of assets, even during times of economic strain, such as the real estate bubble and the oil crisis. Gold has been increasing in value over the years and has not devalued, unlike the US dollar.

There are essentially three different ways that you can invest in this precious metal: 1) buying gold bullion or coins, 2) purchasing a gold ETF (exchange-traded fund), or 3) buying shares in gold-mining stock.

Each of these investments has their own benefits and downfalls. Purchasing an ETF, for example, allows you to trade gold like a stock, but the price is fixed and does not change. This makes it perfect for having in a financial portfolio. Owning physical gold is also beneficial because gold is actual money that will not devalue. However, a downfall is that you need a large jump from what you purchased to what you sell it for in order to make a profit. This poses a problem because physical gold is known to have a wide spread between asking price and bid price. Buying shares in gold-mining stock is not only a lot less risky than owning actual gold, but you will also still be able to be a part of the growth in value of the metal.

With stock prices dropping, now is a great time to invest in gold. It is a commodity that is actual money that will not decrease in value like paper money will. Investors are using gold as a hedge to protect their financial portfolios from the next economic crisis. Although they are not sure when that will happen, they are protecting themselves now in preparation of such an event. Just be sure to not invest everything that you own into gold; wise investors allocate only a portion of their finances to it in order to have a diversified portfolio.

 

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Where to move 401k away from the stock market?

January 29, 2012 By Leave a Comment

With this extremely volatile stock market that seems to be plunging every time we check the ticker, it’s no wonder why you would want to move your 401k away from it. You probably have your concerns about whether or not it’s a good idea, and more importantly, how to go about doing so.

You may be thinking something along the lines of: “Isn’t your 401k supposed to be the best way that you can save for retirement?” Well, the problem with it is that the money that you invested already has decreased in value. In some cases, the $12,000 that a person has put towards their 401k is worth only $9,500. We have all been told that the stock market is going to get better and that all of the plunging is based upon people’s fear. Well, what if it never goes up? Is the dollar amount that is in your 401k going to get smaller and smaller until there’s nothing in it when you decide to take the money out?

When looking to move your 401k away from stocks, you need to analyze why you are thinking about moving it. Is it because your stocks have experienced a significant down and you want to get out before it gets even worse? If you sell your stocks at a low price, you are actually losing a lot of money. It is best to wait it out, and then sell it. In addition, it is important to look at your age. Now, if you are just a few years from retirement, then it may be a smart idea to invest in something a little bit less risky.

A less risky investment would be along the lines of a mutual fund, real estate, or gold. That being stated, the type of asset that you can invest in your 401k is contingent upon what your employer has set up in the retirement plan. You need to discuss these options with the HR department of your employer and make sure that you have options. Most of the time, you cannot buy real estate or gold in your 401k, and it has to be set up in an IRA account.

Mutual funds are the least risky investments, and many investors have been switching to bonds versus stocks ever since the major drop in savings back in 2008. The major plunge in the market left owners of 401k’s feeling like their money was vulnerable and they didn’t want to experience anything like that again, hence switching to a much safer fund.

To save your 401k from decreasing in value, you should consider investing in bond funds. These types of assets are far less risky and volatile than the stock market. If your stock plunged, don’t sell it when it’s low! Although it is worrisome to hold onto it when it’s low, you will lose a lot of money if you sell it at that low price. Just wait it out until it becomes high again, and then sell it if you so choose.

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Is it possible to switch one’s IRA to gold?

January 28, 2012 By Leave a Comment

One of the most important things that you can do for yourself is to set up a retirement account. This account will build a little nest egg for when you decide to quit your job and enjoy the rest of your life. You may be relaxed and sitting pretty on a nice 401k and/or an IRA, but you’ve probably been hearing about the gold craze lately. Have you made a wrong decision to have a cash-based IRA?

The answer is no. You did not make a mistake in the original set-up of your IRA, and you made a great decision to get the type of retirement fund that costs you less in taxes. The pending question that’s on every IRA owner’s mind is if you can switch your IRA to gold investments. Luckily, you are able to!

This gold craze is not exactly new, but investors are now more than ever seeing it as a great investment opportunity. Gold is a precious commodity that is a natural resource and has only increased in value over the years. Think about it; it has survived and thrived through wars, the recession, the real estate bubble, and many other strains on the economy. It is currently being sold around $1,600, compared to just around $250 back in 2001! Who wouldn’t want to be a part of this action?

It’s a bit of a process, but it can be done, and it is relatively easy to do so. Since you already have an IRA account, you will need to open a second IRA account for the gold assets. All this takes is a bit of paperwork from your custodian (be sure that it is a trustworthy and reliable one, these people are handling your money after all!) and paying a few fees.

Speaking of custodians, you are going to have to find one that actually deals with and specializes in gold. Some custodians (like the one you originally went to for your first IRA) may not handle gold. Now, these custodians charge fees, as you know, so be sure to check out your custodian’s types of fees and also fee schedules. Some of them charge an annual fee, while others may charge just a fee per transaction.

It is often a good idea to make sure that the account is self-directed, which gives you the most control over your account. After you have created your second IRA, you must deposit money into this account. This money is how your custodian will be able to invest in gold for you. You tell your custodian what exactly you want to purchase, whether it is gold, silver, bricks, or coins.

One popular question is if you can put gold coins that you already own into your gold IRA account. Unfortunately, there are rules and regulations by the IRS that prohibit this.

So the answer to the impending question of switching to a gold IRA is yes. It is fairly easily done; it’s just a bit of a process. Now, one thing to keep in mind is not switching all of your investments to gold. In fact, having two IRA accounts is greatly beneficial to you. You will still gain interest from the cash in the initial account, while simultaneously making an investment that will earn you thousands of more dollars in the second account.

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