Navigating the Pros and Cons of Investing in Gold: Expert Advice from CFP Jake Skelhorn
Are you considering investing in gold bars to diversify your portfolio? Before you make that decision, it’s important to understand the potential risks and benefits associated with this type of investment. Certified financial planner Jake Skelhorn shared some valuable insights that can help you make an informed decision.
One common reason people buy gold bars is to hedge against inflation. However, Skelhorn pointed out that investing in gold may not always be the best way to protect your money from inflation. The price of gold can fluctuate drastically, and it is not directly tied to inflation. If your goal is to combat inflation, Skelhorn recommends exploring other investment options such as government bonds or the stock market.
Another important factor to consider is the tax implications of investing in gold. Skelhorn highlighted that gold is taxed at a higher rate compared to other investments. Capital gains from gold are taxed at 28% if held for over a year, whereas assets like stocks or real estate may be taxed at a lower rate. However, investing in a gold IRA can provide a tax-efficient alternative, allowing you to buy and sell gold without incurring capital gains tax.
Additionally, it’s essential to understand that investing in gold does not generate income. Unlike stocks or bonds that can yield interest or dividends, holding gold bars does not provide any income. The only way to profit from gold is by selling it at a higher price than you bought it for.
Despite these considerations, Skelhorn acknowledged that investing in gold can help diversify your portfolio. Gold has a low correlation with other asset classes like stocks and bonds, meaning its price may not be affected by market fluctuations. However, it’s crucial to be aware of any additional fees associated with buying and storing gold bars.
If you’re interested in exploring gold investment options further, companies like Goldco can assist you in navigating the process. Whether you’re considering a Gold IRA or purchasing physical gold, it’s essential to conduct thorough research and seek advice from financial experts like Skelhorn to make informed decisions about your investments.
In conclusion, while investing in gold bars can be a valuable addition to your portfolio, it’s essential to weigh the potential risks and benefits carefully. By understanding the factors outlined by Skelhorn and seeking guidance from reputable companies, you can make strategic investment decisions that align with your financial goals.
