Gold and silver have long been recognized as valuable. In the last 5000 years gold is the only form of money that has never failed. That alone should tell you why investors flock to precious metals in time of crisis. Both gold and silver are two of the safest investments you could ever make. They also provide you with the best opportunity to increase your wealth.
If you are considering investing in gold and silver, here are 3 things you should know before you take the plunge:
#1 – Precious Metals Can Protect You From Inflation and Deflation
Both gold and silver can serve as hedges against inflation and deflation. Because of this, there are some experts who believe gold is an asset everyone should invest in. Andrew Carrillo, one of the top financial planners in Miami, advices all of his retiree clients to have at least 5% of their portfolio invested in gold. He himself has 50% of his total investment assets in gold.
And as he so eloquently stated, it’s not running out of money that's the biggest risk when you get ready to retire. Instead it’s running out of purchasing power due to inflation or deflation. Gold and silver can protect you from both.
#2 – Precious Metals Do Not Generate Income
This is one of the main reasons other experts advise against investing in gold and silver. Unlike most investments, precious metals do not generate income. The purpose of investing is to generate an income. This is especially true when you are nearing retirement.
In some cases you may be better off investing in dividend paying stocks or high quality bonds instead of gold and silver. Generally speaking stocks will appreciate over an extended period of time and are fully capable of dealing with inflation.
#3 – High Taxes
This is yet another reason you may want to reconsider investing in gold and silver. The government views gold as a collectible. Because of this you will be taxed as high as 28 percent on any profits you make as a result of selling your gold. When you sale your stocks, you are only taxed as much as 15 percent. That's a big difference.
When it comes to investing in gold and silver, the key is to focus on diversification. You should never put all of your eggs in one basket. You should also avoid gold collectibles or coin products that are considered rare. If you are serious about investing, buy bullion.