Commonly we see advertisements placed all over the internet regarding purchasing gold, silver, and even platinum. The everyday person will often brush off these adverts as simply a con, or remain disinterested. Others seem to jump in on investment as soon as it seems like it’s a popular idea, as we can see with new silver investors regarding the COVID-19 situation.
However, in light of all this information, what are some good reasons to invest in precious metals, if there are any at all?
You Get Better At Saving Money
If you’re a student, and you’re anything like I was in college, chances are you might not be the best at retaining money. You could be one of those extremely hard working individuals who pays their way through college, but more often than not, students haven’t developed financial skills. This isn’t always due to any fault of their own, high school classes rarely cover the subject, and parent’s today are showing less interest in saving money. If you find that money “burns a hole in your pocket”, precious metals could be a realistic alternative to saving money in a bank account.
Here’s why. Precious metals like silver or gold are purchased in ounces, and even though you trade fiat currency for the metal, it still holds value. Similar to a stock, silver and gold prices fluctuate along with the market, and this is due to a variety of reasons. However, over the course of time these materials have held their own against inflation unlike traditional fiat currency. But how does this help you save money long-term? Well, have you ever heard of anyone attempting to purchase goods with pure silver? No, the answer is probably not. Even though you’ve spent money on precious metals, they retain their value, but you’re far less likely to delve into your savings if they’re stored as cold hard metal.
Avoiding Market Crashes
The main purpose of this blog is to stray away from advice bordering on conspiracy theory. Most of us know that if we invest in stocks, even if our total investment goes down, in all likelihood the market is going to recover. But if you need to dip into that money at the point in time the market has crashed, you’re going to find yourself in a bad situation. Luckily, gold, silver, and platinum tend to have the opposite reaction to current market climates. When faith in traditional fiat currency is reduced, faith further increases in historically valued metals.
If you purchase precious metals in its physical form instead of in the form of ETF futures, you might be worried about whether you can sell it quickly. Well, similar to selling off stocks, you can easily sell precious metals through various resources online - following the same tax laws in regards to earnings. It’s not to say that investing in stocks is a bad move by any means, but when you’ve stored value that predictably behaves the opposite in bad times, you’ve built yourself a safeguard.
You might not be at an age where you’re even thinking about giving an inheritance to any future children. However, if you’re in your early 20’s and you’re thinking of settling down at some point, precious metals offer a way to pass an inheritance from generation to generation. You’re storing value in a method where you know that the money that you’ve invested will be worth the same in the future taking inflation into account, at least for the most part. If you’re a sentimental individual, passing an inheritance is a great way to look after your family members for the future in the event of any emergencies.
Reasons to Be Cautious of Investing
As with any investment, even precious metal offers it’s risks. You should never spend any money you can’t afford to lose when you’re making any investment. That being said, metals are commonly referred to as a hedge against inflation. Generally this is because for a large part of human history they’ve been considered valuable for one reason or another. The laws of the market still apply here, during dips of value, there will likely be a correlating rise in value further down the road.
Unless you’re trading ETF futures, precious metals are a physical investment. That means they’re prone to getting stolen, but I think this is far too heavily emphasized by many storage companies. Vault companies will offer to store your precious metals and insure it, but at a cost. Realistically, unless you’re planning to have thousands of dollars of metals stored in your home you’re safe keeping it there if you don’t tell anyone. Everyday normal homes are burglarized for their electronics regularly, and most people have value stored in their devices than in their bank accounts. That’s not to say you shouldn’t take every precaution necessary in order to keep your assets safe. Most home insurance companies won’t cover precious metals and if you’re storing a large amount you should consider vault companies.
Prior to spending any money you should always take pro’s and con’s into account. Don’t follow trends or popularly held belief, as they tend to be wrong. Precious metals can be a great way to learn how to properly save money without feeling the need to spend it immediately. They also can contribute to a diverse portfolio to decrease losses during market crashes. Just make sure you’ve done your research prior to delving into this investment lifestyle. We’ll be including more information on how to properly set yourself up to invest in precious metals in the future.