Gold provides an effective form of asset protection against economic instability and currency risks, acting as both an inflation hedge and currency protector.
Jewels may not be appropriate for every retiree, but adding Gold IRAs and Silver IRAs as diversifiers might make sense for your retirement savings strategy. Learn more.
Stability
Precious metals have long been revered for their stability during times of economic instability. This makes them an indispensable addition to any retirement portfolio as an effective hedge against market fluctuations and turmoil.
As gold and silver prices fluctuate based on demand and market dynamics, it is wise to diversify your precious metal holdings through investments in physical bullion, ETFs or mining stocks.
Additionally, it’s crucial that you consider the tax implications when adding gold and silver investments to your retirement portfolio. As precious metals are considered collectibles under most jurisdictions, their long-term capital gains rates tend to be higher than traditional investments such as stocks or bonds. Therefore, before making any major decisions regarding retirement investments it would often be prudent to consult a financial advisor; they can assist in creating a comprehensive investment plan tailored specifically towards your goals and risk tolerance.
Liquidity
Precious metals add an air of stability and security to an investment portfolio, providing peace of mind during times of economic instability. Furthermore, these investments may serve as a good hedge against inflation because their values often increase when the dollar loses purchasing power.
Financial advisors can offer guidance on the most suitable ways to incorporate precious metals into a retirement savings strategy. They can assist with selecting physical bullion, ETFs or mining stocks depending on your preferences and circumstances as well as explaining any tax implications which may differ depending on where your jurisdiction resides.
Gold is generally more reliable as a store of wealth than silver, although both can perform well over the long-term. A financial advisor can assist in allocating part of your portfolio towards these assets while making sure your retirement savings plan adheres to all regulations. SmartAsset’s free tool connects you with approved advisors in your locality.
Hedge Against Inflation
Inflation is an ever-present risk that threatens purchasing power, so it’s essential that we remain prepared. Whether the cause be COVID-19, government stimulus or otherwise, inflationary pressures have investors searching for strategies to maintain their spending power and preserve it as much as possible.
Gold can provide one solution. While its returns don’t compare to that of stocks, gold has outpaced it 43% of times between 1925 and 2015 (see graph).
Silver can also serve as an effective hedge against inflation, given its dual role as both an industrial metal and financial asset. As with any precious metal that has historically been oversupplied, timing is everything when investing in Silver; dollar cost averaging is one effective long-term approach that ensures you acquire it at fair pricing. Speak to your Morgan Stanley Financial Advisor about adding Gold and Silver into your portfolio today.
Tax-Free Income
Precious metals provide investors with a reliable return without incurring the income taxes that accompany other forms of investment such as stocks and bonds. With no income taxation to worry about, precious metals make an ideal addition to retirement portfolios, particularly for retirees who require additional sources of income beyond stock market investments.
Silver investors who wish to gain direct access to the bullion market often opt for physical precious metals like coins and bars; however, this approach may involve higher manufacturing and storage costs. As an easier alternative, exchange-traded funds (ETFs) offering precious metal bullion or mining-related assets provide an efficient means of investing in gold and silver without needing storage space for each asset type.
More risk-taking investors may opt to trade gold and silver actively, trading their bullion for silver when its ratio returns toward historical norms. Although this strategy requires additional market timing skill and patience, it has proved effective during past ratio extremes.
