Maybe you saw a commercial on TV or read an ad on the internet about the coming financial Apocalypse. It’s only a matter of time so they say. Hearing this talk stirs up a small tornado of panic in your gut and you’re taken back to the recent great recession. You remember all too well how it devastated your own hard-earned savings.
A little fever-pitched, sure, but hyperbole aside, there is one point on which most investment gurus will agree: the value of a diversified portfolio. In diversifying that portfolio, many will recommend holding a percentage of your assets in a hard tangible asset. While protecting your capital is always a good idea, making hair-trigger decisions based on irrational fear is not.
Hopefully, you’re more of a considering type. You’ve taken the time to do some research and have discovered many of the advantages of owning precious metals in your retirement portfolio. You’re thinking that gold might be the ideal choice as you’re looking for something longer term – the kind of investment that will not only diversify your portfolio, but grow it over time.
Firstly, what Is an ETF?
Basically, an ETF (Exchange-traded Fund) is similar to a mutual or index fund in that it performs based on gold market value and is traded like a stock on an exchange. A gold ETF may hold various gold assets, including stocks in mining companies as well as gold reserves. But unlike physical precious metals, an ETF is not a tangible asset: Instead of holding possession of the actual metal, you hold only paper. As some experts say, if you don’t hold it, you don’t own it.
Unlike owning the physical metal, ETFs don’t provide investors with the most direct exposure to gold.
There are many ETFs to choose from and deciding which is for you should be a decision based on performance, expense ratios, fees, etc. ETFs can also be purchased on margin, meaning that investors only front a percentage of the investment’s value. Investors with experience in margin buys know that while on the upside you can magnify your returns handsomely, but it’s a double-edged sword. When you’re on the downside, you lose money twice as fast.
If you’re risk averse, can cover your loses, and have a strong stomach, maybe margin buying is right for you.
If you’re a steely-nerved, high frequency trader looking for something that’ll allow you to quickly move in and out of positions multiple times a day, ETFs might be right for you. ETFs are best suited for the short term. ETFs also give investors the opportunity to participate in gold and silver without having to take physical ownership of any asset. Owning physical gold or silver requires more patience – it is a longer term investment better suited to actual investors, not “traders.
Currently, gold is experiencing a selloff that is making prices low. Prices this low provide investors an excellent opening for accumulating a long-term position in physical holdings of gold.
If you transfer an IRA or rollover a former 401(k) the process is considered a non-taxable event. There are also no penalties. Gold IRA investments are a simple, safe way to diversify your retirement portfolio. One of the best ways to set up a diversified retirement portfolio (and receive tax benefits) is to open a self-directed IRA.
Now while gold or silver ETFs may sound attractive, they have several risks and detrimental qualities in relation to owning physical gold:
Where to Get Started for Making a Better Retirement
With the stock market and the U.S. Dollar at a five year high, and the spot price of gold at a five year low, there may be no better time to invest in gold.
But don’t go into it blindly!
Begin by downloading a FREE mini-course that can help answer many of your questions about gold and silver investing and Self-directed IRAs.
This course is full of important money saving investment tips and expert advice. If you’d like to save precious time and possibly thousands of dollars you need to read this today!
