Tags: gold | retirement | income | metals

Don't Buy Gold for Retirement Until You've Read This

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By    |   Thursday, 16 November 2017 10:53 AM

In a retirement fund, gold cannot be depended on to generate income consistently over the years. People just don’t know what it will be worth when it comes time to use their savings, so there are things to consider when investing in gold for retirement.

Gold has increased significantly in recent years, only to languish for some time. It has a long history of doing just that. For example, those who invested in gold during the 1970s profited tremendously, but the price of gold dropped in the 1980s and went nowhere for a couple of decades.

Here are some things to consider when investing in gold for retirement:

  • Gold is not good as money to withdraw from your retirement fund for an emergency or to cover unexpected expenses. That is better handled through cash equivalents such as savings accounts, money-market funds, or CDs.
  • Gold is a better investment as a hedge against inflation or during political and economic uncertainty. However, if used in a retirement account, it should make up a small portion of a diversified portfolio, about five or 10 percent, according to CNN Money.
  • It doesn’t necessarily act as a hedge against rising prices all the time, the Balance points out. It does seem to work temporarily during a crisis, which occurred during the Great Recession starting in 2008. It rose dramatically in the years ahead, but suddenly came to a stop in 2011.
  • Gold may be too risky for retirees because of its volatility. People planning on retirement want investment securities that increase the value of their savings accounts without the unpredictable swings of gold prices, which can stay dormant for years, AARP notes.
  • Some IRAs are holding physical gold in accordance with federal regulations. The precious metals must be held by an IRS-approved custodian or trustee, Next Avenue explains. There are fees and storage costs that stocks and other investments don’t have. Annual fees may be waived for a year or two to entice new customers. Some observers say investors should look at gold the same way they look at the real estate market, understanding the years it can take for a recovery after a significant downturn.
  • Instead of focusing on gold for retirement, the precious metal can make a good insurance policy. It will always retain a certain amount of value, even during bad times. Keeping a small amount of your investments in gold means you can cash it in if you are hit with a sudden financial burden.

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In a retirement fund, gold cannot be depended on to generate income consistently over the years.
gold, retirement, income, metals
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2017-53-16
Thursday, 16 November 2017 10:53 AM
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