How to Make Precious Metals A Solid Part Of Your Retirement Plan


How to Make Precious Metals A Solid Part Of Your Retirement Plan

October 16, 2012 378 view(s)

Planning one's retirement involves a lot of decisions to make; whether or not to include precious metals as part of one's retirement portfolio is a possible choice well worth considering.

Stocks, bonds, a cash savings account, an IRA, a gold and silver investment portfolio - each of these are possibilities that come with their own unique set of pros and cons that should be fully thought through by anyone trying to make sure that their golden years are indeed golden, financially speaking.

Deciding whether or not investing in precious metals is right for you personally however, involve educating yourself on what the ramifications and benefits are. A closer look at your choices and what they involve will get you well on the road to deciding how you want to approach the exciting world of precious metal investing.

The first thing you want to think about is that unlike stocks, when you hold precious metals you are not going to get dividend payments because they are more of a way to "insure" yourself against inflation and market stability than a source of income.

Secondly, while most people cover a gold and silver investment, with perhaps platinum or palladium thrown in, you should know that copper also offers a viable investment opportunity due to its industrial use.

Investing in precious metals successfully involves fully understanding what they are used for.

  • Gold has a large role in mining and refining.
  • Silver is used in industrial applications ranging from dental to pharmaceuticals to electronics and even water purification.
  • Copper, while often overlooked, can be used in plumbing, for electrical wiring and a range of other applications that are particularly important in growing economies like China and India where new structures are regularly being built.

As mentioned, choosing precious metals like these is not about bringing in a regular income. Instead, the purpose is to buy while prices are low and if need be, sell them for a profit in the future. Advice regarding the percentage of one's retirement that should be invested in precious metals ranges from 3% to 10% of total portfolio value, but each investor will need to decide what makes sense for them. Some may even decide that stock in mining companies is a better way to go in their circumstances, but if this choice is made it needs to be remembered that stock market fluctuations will impact the value of the stock which undermines the primary reason people choose to hold precious metals: because they offer stability.

Gold and silver will need to be stored; this generally involves some expense. Perhaps the best choice is to use a third party depository service where the bullion, bars or coins can be stored securely on your behalf. That way, if you ever need to sell them in the future you can do so quite rapidly and without a great deal of expense. However, these services do typically charge an annual fee which is important to consider.

In general, as long as those planning their retirement carefully research their options, precious metals can be a very smart way to diversify by offering security and stabilizing your portfolios.