A lot of investors are now converting their normal 401k plans and converting almost all, if not all of their retirement fund into tangible gold. But why is it said that investing in gold for your retirement is a good idea, and should you partake of this popular trend as well? In this article, you will learn about gold investments and how they are changing the face of retirement funds and how you can take advantage of it yourself.
Why is Gold 401k Better?
There are lots of valid reasons why investing in gold is a wise choice, and the main reason is that the price of gold is a lot more stable than that of paper currency. You may have noticed that these days that the spending power of the dollar is beginning to decline, this is all thanks to inflation. The recent financial crisis left an indelible mark on the US economy (and many economy’s around the world), and with that comes inflation, or the lowering of the value of currency. Inflation will also affect the money that you have saved up, this includes your 401k; so if this downward spiral continues, your money will be worth far less than what it is right now. The little nest egg you have been working hard to build up may not end up being as big as you had hoped.
But if you invested in gold for your 401k, then the story would be a lot different. Unlike paper currency, whose value depends on the strength of the country’s economy to back it up, gold retains its value regardless of wherever you are. Whether you live on the US or in other parts of the world, the price of gold will pretty much remain the same, thanks to an international standard on gold prices; this makes gold and other precious metals almost inflation-proof, and thus a wise investment.
Another advantage of using gold in your 401k is that they are easily liquidated in any part of the world. Gold is considered as a precious commodity in almost all countries in the world, so trading them in for local currency will not be much of a problem.
Some Disadvantages of A Gold 401k
Though everything may seem great, there are some risks involved in investing in gold that you need to be aware of. For one thing, if you are looking to make a huge profit from investing your 401k in gold, then you will be disappointed. The price of gold is rising, that’s a fact, but it is a long term investment. So after a couple of years, your profit from your gold will not be that large, but over many years, it could be substantial. But anyway, the real reason why you should look to invest in gold in the first place is because you want security for your retirement funds.
The price of gold, just like any other commodity, it tends to rise and fall depending on the demand for it; yes there are times when the value of gold will fall, but over time it will only rise again. The trend these days show that the price of gold is increasing (as it has done in the past 10 years); and analysts predict that this trend will continue for years to come. So, if you are planning to buy gold for your retirement, now is probably the best time to do it.
If you want to make your 401k expand, then you should place it in an aggressive portfolio; this move may be high-risk, but it will make you more money than investing it in gold, though you should be prepared to lose your money as well. If you want some balance in your 401k, do what other people are doing and invest a part of your money in gold and leave the others to regular investments.
How to Start Investing in Gold
If you are a new at investing in gold, then you should first look to gold bullion coins. There are numerous types of gold bullion coins out there for you to choose from, amongst the most prized are the American Golden Eagle, the Canadian Maple Leaf and the South African Krugerrand. These coins are especially minted for the purpose of investing, so their value is dependent on the amount of gold. Gold bullion coins are different from gold collectible coins because their value is determined almost solely by the amount of gold content within each coin. Unlike collectibles where they are rare and the beauty of the coin accounts for a large chunk their price, when the demand for such coins diminishes, which sometimes do happen, their value also takes a nosedive, making them quite a risk.
Beginners are usually discouraged from investing in jewelry, primarily because of their high retail value, and their price also depreciates with the passage of time. Coins, on the other hand, are easier to come by and their value does not diminish, especially if they are well-looked after.
If you want to keep your retirement funds safe, then you should consider trading them in for tangible gold. If you want to make sure that you have more than enough money by the time that you retire, placing them all in gold is the best move that you can make. You no longer have to worry about getting your retirement money once you reach a ripe old age only to find out that your fund is nowhere near what you had expected.
There is one thing that you get from gold that you cannot get from other forms of investment, and that is security and peace of mind, and for some people that is worth more than money.