Does Dave Ramsey Recommend Investing in Gold and Silver?
Before making investments based on emotional feelings such as fear or greed, it’s essential that you research its history as well as consulting an investment expert before taking any decisions.
Ramsey is an expert on personal finances who draws upon his own money mistakes as well as Bible scriptures to impart sound money-management practices to millions of Americans. According to Ramsey, investing in precious metals should not be done.
It’s an emotional pitch
Many turn to personal finance guru Dave Ramsey in hopes of becoming financially stable. His advice is rooted in sound money management principles he has perfected through personal experience and biblical scripture, though precious metals may not necessarily provide financial security.
Ramsey recently claimed in an episode of his popular podcast that gold and silver investments are bad decisions due to their inherent fear and greed characteristics, which over time provide inferior returns.
As well, he asserts that precious metals aren’t an effective hedge against inflation – which is false since gold has historically proven its worth as such an investment by returning 35% annually from 1973 – 1979! Additionally, their longstanding history as currency makes precious metals an excellent way to diversify your portfolio while creating additional hedge against inflation. But keep in mind that precious metals don’t generate cashflow so only invest part of your total wealth into precious metals investments.
It’s volatile
Precious metals may not be considered traditional investments, but they have long been seen as a secure store of wealth. Precious metals offer protection from market volatility, political unrest, currency weakness and economic collapse as they retain their global purchasing power over the long-term and don’t depend on stocks, real estate or any other assets for value retention.
Ramsey may be correct that gold and silver do carry some market risk, but his assertion that they are more volatile than other investments is false. Indeed, precious metals have proven their ability to reduce portfolio volatility during periods of extreme stock market volatility by providing increased returns with reduced portfolio risk-weighted returns.
Before investing in precious metals, investors should carefully consider their risk tolerance, investment goals and time horizon. Furthermore, investors should research tax implications as any gains on such assets could incur higher collectible rates in certain jurisdictions. Ultimately, it’s wise to seek professional advice from precious metals specialists before making any definitive investment decisions.
It’s a collectible
Dave Ramsey has garnered widespread acclaim as an authority in personal finance, yet lacks expertise when it comes to precious metals. His arguments tend to rely more on general impressions than on facts – making it hard for him to provide sound advice about these metals.
Gold and silver may not be reliable inflation hedges, yet he fails to mention their performance during the last period of high inflation in the 1970s. Gold was one of the best inflation-hedge investments during this time.
His statement that silver is less dense than gold is inaccurate: to store $50,000 worth of silver requires twice as much space.
It is essential to assess investments objectively. Gold and silver have historically provided low rates of return while traditional assets like real estate and growth stock mutual funds have provided superior returns.
It’s tax-inefficient
Gold and silver have historically proved themselves effective during times of currency crises; however, during such crises they rarely served as the main medium of exchange; instead investors have sought gold and silver as diversifiers to reduce risk.
In other words, these investments provide insurance against the inherent instability of stocks and bonds; however, their gains are taxed at more exorbitant rates than stocks or real estate investments.
However, due to taxes, many families end up paying a significant amount on their gold investments–and this can reduce potential returns significantly. When considering investing in precious metals such as gold and coins, be sure to seek professional guidance for more insight. An Atlanta Gold & Coin Buyer, for instance, can assist with understanding tax-efficient ways of investing.
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