Does Dave Ramsey Recommend Gold?
Personal finance guru Dave Ramsey is well-known for his advice on living within your means, paying down debt and investing only in safe assets such as mutual funds or real estate.
He has published articles that assert precious metals aren’t reliable investments. This article will examine why his claims are false.
It’s a safe haven
Gold has long been seen as a safe haven, providing some stability during times of economic turmoil. Before investing in it, however, you should understand its limitations and how it fits within a diverse investment portfolio. Furthermore, keep in mind that gold doesn’t generate income; therefore it won’t replace your retirement income source; consulting a financial advisor can help determine whether adding this asset makes sense to your portfolio strategy.
Gold’s price often increases during times of economic instability and crisis due to supply and demand factors and an instinctual flight to safety response. Although these gains may be temporary, diversifying your portfolio with assets offering higher returns is still highly recommended.
Dave Ramsey advises most individuals to forego gold and precious metals altogether and instead concentrate on paying down debt and investing in growth stocks or real estate – this way they can build wealth while protecting purchasing power.
It’s a store of value
Gold has long been used as a store of value, safeguarding wealth during economic downturns, inflation and geopolitical turmoil. Unlike paper money which often devalues through overprinting, gold remains finite as an actual physical commodity that remains highly durable and easily identifiable (all the gold mined could fit into a 73-foot cube!). Furthermore, its value density means it contains an enormous amount of wealth in a limited area.
Gold can help diversify an investment portfolio. Due to its low correlation with stocks and bonds, it makes an excellent hedge against declining financial markets; indeed, prices of gold rose during six of the eight stock market crashes over time. Furthermore, it protects investors against rising interest rates – though its effectiveness depends on your overall asset allocation strategy; moreover, having somewhere secure to store gold will only do so much good!
It’s a hedge against inflation
As inflation threatens, many people turn to precious metals as an investment hedge. Part of their appeal may come from owning something with historical value; however, there are better options for protecting against inflation. Holding gold and silver investments is no reason not to move towards other avenues.
Ramsey claims there has never been an instance where gold was used as an exchange medium during an economic collapse; bartering usually takes priority over investing in precious metals like gold.
As the author points out, if you are concerned about inflation, it is crucial to look at real rates rather than nominal ones. At present, real rates are negative due to aggressive quantitative easing policies being pursued by central banks – making gold an unsuitable way to hedge against inflation; but still having some value as an asset diversifier.
It’s a good investment
Gold has always had a stable market value and serves as a highly secure form of wealth preservation; unlike the fluctuating values of other investments. Plus, its supply is virtually limitless making gold an excellent way for investors to hedge against inflation or protect savings.
Physical gold does not generate income or yields, which makes it less appealing for investors who seek regular returns from their portfolios. Still, physical gold can add significant value by diversifying risk exposure and potentially improving long-term returns.
Gold investing can be a smart way to diversify your portfolio, but it is crucial that you understand its risks and rewards. Working with an experienced financial advisor is crucial; SmartAsset’s free tool connects you with advisors in your area who serve the same field so you can interview them without incurring fees to find your perfect fit.
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