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Should You Invest in Gold?

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This post provided by SavingsAccounts.com.

When investors are clamoring for gold and boosting the price to record levels, you may be tempted to join the party. Should you put your savings in solid gold? Better think twice.

When the stock market is shaky, a true high yield savings account nowhere to be found, and the economy is in the doldrums, many investors begin looking at alternatives for their investments. Gold appeals to many investors as an indestructible, limited, universally recognized source of wealth.

As more and more investors pile into the gold market, the demand for the precious metal can create a "gold rush" in which the price is bid up to record levels. The rising prices entice more people to invest, expecting phenomenal returns to continue. Don't count on it.
Isn't gold safer than stocks?

Gold can sometimes seem like a safer investment than stocks, but don't be fooled. Historically, the best long-term performance has always come from savings accounts and retirement accounts that invest in stocks and bonds on your behalf.

Stocks bounce up and down in the short term, but over the long haul there's been no better investment. The stock market has improved steadily over 200 years. Gold, on the other hand, has lost value over the past two decades. In the long view, its worth has been pretty much stagnant.

In a July article, the Wall Street Journal described gold as "fear metal", the thing you buy when you're afraid of everything else. Gold's real value has been dropping since the 1980s, though, and isn't likely to improve. Not only will you fail to make a killing speculating in gold, you'll probably lose money as inflation pushes the price of everything else up and the cost of gold stalls.

Scary as it looks, the stock market is still the best place for your investments to grow wealth.

As the WSJ puts it:

    Companies grow, and ultimately return profits to shareholders. The biggest companies like Exxon (XOM), Apple (APPL), Google (GOOG), continue to innovate, develop new products, create new jobs and have earnings and revenues growth. Gold can't compete with that.

Protecting your savings account

What about protecting your retirement savings as you get close to retirement age? That's what savings accounts are for. Over your career, you'll probably gradually shift your investments away from higher-risk stocks towards bonds and low-risk funds. You probably also have an emergency fund that you keep liquid in a high-interest savings account.

As retirement approaches, you can start putting more of your savings dollars directly into a online savings account, build a CD ladder or get a money market account for your nest egg. Your deposits in savings accounts will be protected by the FDIC. That's as secure an investment as you can get. If you do your homework and choose an FDIC-insured online bank with high interest rates, you'll be guaranteed a positive rate of return.

That's a lot better than what you'll get if you jump on the bandwagon and buy a lot of gold. Instead of betting your future on another "gold rush," deposit it in an FDIC-insured savings account. You'll get your money's worth, plus a tidy interest rate.

Gold Rush: Should You Invest in Gold? was written by Sierra Black, a writer for SavingsAccounts.com, a website where you can research the best savings accounts and compare high yield cds.
to more
http://blogs.forbes.com/moneybuilder/2011/01/21/should-you-invest-in-gold/?partner=yahootix

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