Dave Ramsey Recommends Investing in Gold
Dave Ramsey is a well-recognized financial and motivational speaker, often offering controversial advice.
Many of his statements regarding gold have been subject to widespread scrutiny. Here are the reasons for their criticism.
At first, it’s essential to analyze the history of an investment type to better understand why or if it should be beneficial.
1. It’s a Commodity
Gold has long been used as currency, jewelry and a store of value in tribal societies across the world. Gold can hold its value in volatile financial environments but should instead be seen as an investment commodity within an overall diversified portfolio.
Investors looking for gold investments have several options available to them, from physical bullion purchases and exchange-traded funds (ETFs) which track gold’s pricing, to investing in shares of gold mining companies. Investors investing in physical gold should take care when considering storage and insurance costs when making their decision.
Gold investment offers many advantages over investing in stocks or bonds due to its independence from external forces that support it in keeping its value, such as interest rate fluctuations. Therefore, it can be seen as less risky.
2. It’s a Store of Value
Gold has long been known for maintaining its purchasing power over the years, making it an effective hedge against inflation. Many investors purchase gold as an insurance policy against global inflationary trends.
Physical gold is an attractive investment choice because of its portability and fungibility – meaning that pieces can be divided up without losing value. Gold also serves as an ideal place to save during times of economic instability or financial repression, with people, companies, and nations that previously invested in Treasuries now increasingly turning towards this form of asset diversification.
Gold ETFs offer an effective way of diversifying into this trend; however, you will need a place to store the metal or pay capital gains tax when selling.
3. It’s a Financial Asset
Gold can provide a strong diversification strategy. Gold tends to outshone stock markets when markets falter, while also acting as a hedge against inflation.
Though there are various methods available for investing in gold, the best course is to consult a fiduciary financial adviser as your trusted adviser in order to decide if this tool should form part of your strategy. Investors can purchase physical gold coins or bars, exchange-traded funds (ETFs) that track its price or shares of mining companies that specialize in it.
Gold should be treated as an investment with long-term horizon, and investors must be prepared to hold onto it for years before selling it. Due to its insensitivity to bond yield fluctuations and income potential issues, however, only 5-10%-10% of your total portfolio should consist of gold holdings.
4. It’s a Physical Asset
Gold’s resistance to inflation and negative correlation to the US dollar are among its many compelling arguments for inclusion in your portfolio. Furthermore, its low correlation to stocks and bonds provides diversification.
Investors looking to gain exposure to gold can purchase physical bullion coins or bars; however, this method comes with additional storage, insurance and capital gains taxes when selling assets. As an alternative, they may choose exchange-traded funds (ETFs) or shares of mining companies producing gold as investments.
Gold can bring many advantages to your portfolio, including proven returns and liquidity. However, it is essential that you carefully assess your own situation prior to making any decisions regarding gold investments.
5. It’s a Security Asset
Gold’s price remains relatively steady even during times of market instability and economic uncertanity, giving investors peace of mind during these uncertain times.
Gold can be an effective way to diversify your portfolio and protect against inflation. But keep in mind that gold does not generate income.
Gold investments come in various forms: physical coins and bars, mutual funds, exchange-traded funds (ETFs) and cryptocurrency. Your Morgan Stanley Financial Advisor can assist in finding the ideal vehicle to complement your portfolio.