Does Dave Ramsey Recommend Gold?
Gold has long been seen as a good way to protect oneself against inflation and maintain financial security.
However, investing in precious metals does not come without risk and should always be discussed with a financial adviser prior to making any money moves. A fiduciary will only recommend investments which serve your best interest.
It’s not a primary medium of exchange
Gold can be an attractive investment and safe-haven asset in times of economic instability, as its resistance to inflation makes it a reliable store of wealth that retains value over time. But before diving in headfirst into gold investments, make sure that you understand its drawbacks as well as potential gains.
Gold can be expensive to own. Storing it at home carries with it an increased risk of theft, while professional storage facilities may charge fees to store precious metals safely and responsibly. Furthermore, you will likely incur insurance costs to cover against loss or damage to your investment.
Gold investment may be beneficial if you’re concerned about economic instability or global pandemic, but any decision should be based on personal risk tolerance, financial goals, and market outlook. Consulting a financial advisor is also key when making such a choice.
It’s not a safe investment
Gold isn’t considered to be a safe investment because its value fluctuates depending on market forces, yet its prices can serve as a powerful hedge against inflation and add diversification to an investment portfolio. Still, this asset should only account for 10% of your overall investments to mitigate its potential riskiness.
Also, selling physical gold can be complex. To sell physical gold you will have to locate a dealer offering coins or bars you desire before storing them safely – an expensive and time-consuming process which may also leave you exposed if prices decrease unexpectedly.
Gold has traditionally outshone stocks during times of economic distress. However, gold doesn’t protect savings against inflation or market risks and should therefore only comprise a minor part of your overall portfolio. A fiduciary financial advisor could assist in helping to manage your investments through both traditional and alternative investments to ensure you maximize performance over time.
It’s not tax-free
Gold may not be tax-free, but it offers several attractive advantages. Due to its low correlation with stocks and bonds, it makes gold an appealing asset during times of market instability or uncertainty, as well as offering protection from inflation or geopolitical uncertainty.
Investors should note that any gains on gold investments will be taxed as capital gains by the IRS due to its classification as a collectible such as coins or baseball cards. Therefore, investors should take measures to minimize taxes by holding it in an investment vehicle that offers lower taxation.
An individual may invest in physical gold bullion through a brokerage account or traditional or Roth IRA, mutual funds focused on gold mining industry or exchange-traded funds (ETFs), taxed at long-term capital gains rate; however, investors should take note as sales taxes on precious metals vary widely from state to state.
It’s not easy to sell
Gold can be an attractive investment due to its historically low or negative correlation with stocks, bonds, and other asset classes. Furthermore, its price tends to increase gradually over time making it an excellent diversifier.
However, selling physical gold can be challenging. While you could seek out a bullion dealer to purchase it from you at less than market value, they may require you store it with them in an uninsured safe-deposit box which may void their insurance policy.
Gold investments can be difficult to earn a decent return over the long-term, as there is no dividend or interest yield generated through gold purchases, leading to performance lags in your portfolio. A gold IRA may help mitigate some of these drawbacks but be wary of scammers or opaque pricing schemes that could result in you losing money from investing.
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