18 REASONS TO BUY GOLD IN 2018 NEW CHALLENGES AND CHOICES SERVE TO ENHANCE THE VALUE OF GOLD More than the symbol of prosperity and prestige it has been throughout the history of civilization, gold remains a true store of value today. That it will be anything less than this at any time in […]
What You Need To Know If Considering A Gold IRA Rollover
Investing in a gold IRA rollover is growing in interest and the fact that you have landed on this page suggests that you are at least considering the option, maybe you have not yet made up your mind. But why should you, at least, consider investing in a gold retirement account?
With the price of oil currently falling and at a rapid rate, and the stock markets starting the year with a decline, a lot of people are showing concern with regards to their investment portfolios especially those connected to their retirement plans and this is one reason why they are looking to invest in alternatives. The gold market is a great way to increase your financial protection by diversifying your investments into something like a gold ira rollover.
In 1997, Congress passed the Taxpayer Relief Act which allowed investors to put away gold and other metals into a self-directed IRA. They were responding to investors who wanted to diversify their retirement portfolio from paper assets like cash, stocks, and bonds to add some tangible assets.
Edmund Moy, who is the leading Strategist for The Fortress Gold Group and was also the Director of the US Mint between 2006-2011, stated the following an article he wrote in September 2014: (click here for original source)
“By 2013, the total amount of assets held in all the Individual Retirement Account’s set up in the USA totaled 6.5 trillion dollars, and out of that amount 2.5 – 4 percent were now in non-traditional forms, such as gold.“
He went on to state:
“And looking long-term, there are several risks that favor the continued growth in gold IRAs, such as the fragile global economic recovery, potential of aggressive inflation in the United States, growing concern of a major stock market correction and increased geopolitical risks.”
When it comes to building a diversified investment portfolio, investing in alternatives from the normal investments, needs to be considered. The main reason being that diversification helps balance out the variances in values of other types of investment commodities. Sometimes an investor may be heavily invested in a particular type of investment such as stocks or ETF’s, but with a diversified portfolio, they may well have stocks from various sectors from the retail sector to the tech sector.
When one of these sectors, such as the oil sector, is going through a bad patch, as it is at the time of writing this, the chances are good that sectors such as retail or tech stock may be doing quite well. This not only balances out losses from the oil sector, but it can actually help to increase the value of a portfolio significantly over time.
Investors Want More Diversification
True effective diversification is not just diversifying stocks and ETF’s, it is much more than that. More and more investors are looking to broaden their horizons by investing in things like REIT’s, corporate bonds, gold, and silver, as well as stocks and ETF’s.
BullionVault, who are a leading peer-to-peer gold-and-silver-bullion exchange, based in London, recently produced their annual report and analysis on how varying assets have performed over the last 40 years (1976-2015) in both the UK and the USA.
As you can see from the facts below, although not the number one performing asset, gold has beaten other key assets in its returns over the past 40 years and has this century outperformed corporate bonds by a considerable margin.
- Gold’s 40-year change (+669% gross of costs) has beaten inflation (328%), housing (598%, excluding costs + yield) and cash (cumulative 535%).
- Commodities have dropped below end-1975 levels (-3.05%);
- REITs are the best-performing asset both since 1976 (9,177% cumulative on reported performance before costs) and also so far in the 21st century (up 484% since 1999);
- Gold is the next best performer since 1999 (+340%) and then corporate bonds (160%);
- Since 1976 gold rose in all 3 years when US stocks lost 10% or more, averaging 9.6% gains. It averaged 11.3% when REITs fell the same, rising on 3 of 5 occasions;
- Cash interest rates have lagged inflation 16 times since 1975. Gold rose in all but 4 of those years, three of them 2013-2015;
Why No Portfolio Should Ignore This Investment
When it comes to building a diversified investment portfolio, investing in a gold IRA rollover should seriously be considered. One of the reasons for diversification is that it helps balance out the variances in values of other types of investment commodities. As has already been mentioned, an investor may be heavily invested in stocks or ETF’s, but a diversified portfolio will have stocks from various sectors from the retail sector to the tech sector.
With all this being said, many people want to know how much this type of investment should be in a diversified portfolio. In addition, they want to know, why buy gold?
How Much?” The first thing to understand is that adequate levels of gold investment in a diversified portfolio should be somewhere between 5% and 10% of the entire portfolio. Some investors argue more is better, but levels from 5% to 10% are the industry standard.
A Shelter Against Volatility The answer to why an investor should purchase this kind of investment is multifaceted. The first reason to invest is because it can be used as a hedge of protection against market volatility and inflation. Market volatility can affect the value of gold, but it typically affects it much less than other types of investments. One of the reasons for this is that the value of stocks, bonds and ETF’s are based on paper money and not in gold.
Protection from Inflation-Deflation –Inflation has always been a concern because inflation weakens the value of paper money. However, gold does not labor under the same constraints as paper money. It has a value that is established mainly through demand. Paper money can be weakened when there are shifts in power from one country to the next, or when there is some sort of political upheaval. In some cases, paper money can be rendered completely worthless, should the affairs of a particular country get bad enough. It is in these situations, gold benefits the investor.
Gold has had a remarkable performance during times of inflation and also deflation. Inflation is basically a period when the economy of a nation is struggling and the cost of living is high. During these times, gold prices tend to increase and that’s why it is often regarded as a ‘hedge against inflation’. Deflation, on the other hand, is when the economy is also struggling and business activity is quite slow. During deflation, it has been seen to perform well too. (check out my page on inflation and how it has impacted on us over the years)
Value Another thing to consider is its value. While the value of gold did skyrocket some years back, reaching almost $2000 per ounce, it has since slipped to around $1200 per ounce (Current gold price can be found in the sidebar to the right). There is some discussion as to its value throughout the rest of 2016. Some experts are expecting gold to experience an explosion in value sending it closer to $2000 per ounce again. Other investors feel that while gold may not rise to this level, its values will steadily increase throughout 2016 and into 2017. Regardless, gold is at a good value and purchasing gold at current prices may be a wise investment as it is poised to increase in value, both in the short-term and the long-term.
The Various Options for Investing in Gold Lastly, there are many different opportunities for an investor to purchase gold. It can come in the form of jewelry, collectible coins, legal tender numismatics as well as bullion. In addition, a gold investment can take the form of self-directed IRAs or gold backed investments, such as stocks in gold mining and refining companies. With coins being sold with as little as 1/10 of an ounce of gold, even an investor with limited capital can still invest.
It’s not difficult to see why it has been a popular investment for professional investors for many years. It’s also not hard to see why it still remains an extremely popular investment. If you’re looking to diversify your investment portfolio, but you’ve yet to venture into this kind of investment before, you may want to consider it now. With all the upsides of investing in it, it’s hard to ignore this valuable commodity.
Should You Invest in Oil?
Information On How The Correct Crude Oil investment Can Increase Your Personal Wealth
Should you invest in oil? What are the options for investing in crude oil wells? Not so long ago these questions were not asked, it was a given that oil investment was the thing to do! The price of oil hit its all-time high of $151.72 a barrel in June 2008, even two years ago in may 2014 the price was relatively high at $103.09 a barrel. Today (24th May 2016) the price is at a low of $48.50 a barrel. Although a long way from that aforementioned high, it certainly is nowhere near the low of 1948 of $15.16 a barrel. (image below is Crude Oil Prices – 70 Year Historical Chart). So what is the answer to the initial question now? Should you invest in oil?
Well first off, I’m not a financial advisor anymore and this website is not about giving advice, it’s about giving the best and unbiased information I can to help you come to your own decision. With any investment, you should always seek the professional advice of an advisor, especially if you have never invested before. so I’m just going to give you all the information I can and you can take it from there.
When it comes to investing, the standard call is ‘buy low, sell high’ and oil is at a low price right now, but just because it is low, doesn’t mean you should buy. Why not? Well because it may be low today, but will it remain low tomorrow and the next day and the next…? When investing in oil, precious metals, art, property, stocks, whatever it is, going in at a low price is not always going to guarantee a return. ‘Now you may say, Yes but if I stay in it for the long haul, surely prices will increase?’ Maybe, but there is no guarantee that will happen. This is why when it comes to particularly oil investment you got to consider two things:
- The history of the market
- The demand for the product
The History of The Oil Prices
Looking at the chart above you can see that in 1973 the price of oil started going up from £19.05 a barrel, to hitting its peak in April 1980 of $116.52 a barrel. From 1980, it then started to slowly decline until it the low of $16.44 in November 1998 (not far off the price in 1948 I mentioned earlier). Then it began to rise again, reaching its highest peak yet, in 2008, and since then it has been on the decline again. So if you were lucky enough to buy into oil in 1973 and waited seven years to sell in 1980 you would have got a good return. Or if you bought in November 98 and waited 10 years to sell in 2008, you would have had a good return then also. The history of any investment type can only tell us how it performed in the past, it cannot tell us how it will perform in the future. Of course, people predict how well an investment may perform in the future all the time. Take for example this prediction by Dan Dicker, a 25 year veteran of the New York Mercantile Exchange where he traded crude oil and natural gas, who predicts that oil will reach the price of $120 a barrel by the end of 2017. He gives a very full and detailed explanation as to why he feels oil will hit similar prices as of 2008, but it doesn’t mean he is right. A simple Google search on oil price predictions will show you that the general consensus is more conservative view. Longforecast.com predicts that oil will reach a barrel price of $80.60 in May 2018 then bouncing between $78 a barrel from June 2015 to $75 a barrel June 2020. Whether it is a conservative $78-80 a barrel or the highly optimistic $120 a barrel, the overall predicted view is that oil prices will increase over the next few years.
The Demand for Crude Oil
Crude oil and its demand cover a plethora of areas. Of course, it is used for the obvious such as gasoline and heating oil, in fact, according to the US Energy Information Administration, about 75% of the 6.79 billion barrels of petroleum used in the US in 2012 were used for gasoline, heating oil/diesel fuel, and jet fuel.
However, oil is not just used for fuel. Plastics, synthetic materials, and chemical products all derive from crude oil and it can be found in many common household items as outlined in the table below.
In addition to the demand for oil to be used as fuel and manufacturing, its demand is affected by the economic growth of a country. If a country’s economy is growing, its growth is of course dictated by consumer demand. If consumers are spending, then growth occurs. If consumers reduce their expenditure then growth slows. This, of course, is only a basis of economics, there are additional factors, but the premise remains. Right now developing countries like China and India do have a high demand for oil, Although India could be replacing China as the main player of global demand growth, nevertheless, as countries develop, demand increases. The price of oil, therefore, is dictated by supply and demand.
check out the different products made with crude oil.
|Pantyhose||Rubbing Alcohol||Carpets||Hearing Aids|
|Motorcycle helmets||Pillows||Shoes||Electrical tape|
|Safety glass||Nylon rope||Fertilizers||Hair coloring|
|Toilet seats||Candles||Credit cards||Aspirin|
|Fishing rods||Linoleum||Soft contact lenses||Trash bags|
|Hand lotion||Shampoo||Shaving cream||Footballs|
|Paint brushes||Balloons||Fan belts||Umbrellas|
|Lipstick||Tennis rackets||House paint||Guitar strings|
|Ammonia||Eyeglasses||Ice chests||Life jackets|
|Cameras||Artificial turf||Artificial Limbs||Bandages|
|Dentures||Ballpoint pens||Nail polish||Caulking|
|Skis||Fishing lures||Perfumes||Shoe polish|
The Different Products Made With Crude Oil
What are The Different Ways To Invest In Oil?
Investing in oil can be done via a number of methods. Each method, of course, has its own level of risk and reward and varies from direct investment in oil and even oil wells to ownership in various energy-related investments.
One direct method of owning oil is through the purchase of oil futures or oil futures options. Futures are highly volatile and involve a high degree of risk. In addition, investing in futures may require you to do a lot of homework as well as invest a large amount of working capital.
Another direct method of owning oil is through the purchase of commodity-based oil exchange-traded funds (ETFs). ETFs trade on a stock exchange and can be purchased and sold in a manner similar to stocks.
Have You Ever Considered Investing Through A Private Placement Fund?
In addition, investors can gain indirect exposure to oil through a diversified private placement fund, which combines the safety of a blended portfolio with high-yield tax advantaged income. Private placement funds obtain the ownership interest in oil & gas wells for its partners. Revenue Streams from the production of oil, natural gas, and related products are then passed through to its partners in the form of Quarterly Dividend payments. Tax deductions generated by partnership activities are also passed through to the partners
The Benefits of Directly Investing in Oil Wells Through Private Placement Funds
Because it is difficult to predict the future of any investment, the biggest risk in oil direct investments is not being able to predict with certainty if a new oil well project will be a success. However, despite the lack of future predicted success, the US government gives generous tax benefits to encourage domestic energy exploration and development.
If you consider a private placement fund to provide direct oil investment, you will want to consider ensuring your investment is protected as best as possible. Investors know that diversification is a must when it comes to lowering the risk of loss, and direct oil investment is no different.
The traditional approach to investing in oil directly is to put the entire investment into a single oil well. The problem with that is around 50% of wells drilled are dry holes and only 1 in 10 producing wells are ever outstandingly productive, therefore the risk of losing your entire investment in any one well is over 50% and the chances of getting a good return on your investment is less than 5%.
When we refer to the diversification of investment we mean not putting all your investment eggs in one basket. Don’t invest all your funds in stocks or property. A good investment portfolio will invest in energy, precious metal, stocks, property and the like, so that when one is performing badly, the others will prop it up.
So how does the concept of diversification work within a private placement fund and direct oil investment? By using a diversified private placement fund. This combines the safety of a blended portfolio with a high-yield, tax-advantaged income. By investing in multiple well projects progressively the “dry-hole” risk is spread across the entire well portfolio, significantly reducing the risk to the individual investor with the investment capital spread over dozens of projects. About 4 wells drilled are dry-holes, meaning around 6 of 10 are oil-producing wells. About 2 of the oil-producing wells will be extremely profitable, which means that the risk of losing entire investment over all wells becomes negligible. On top of that, a good quality fund will provide quarterly income dividends, based on the entire well portfolio. Check out our post – oil investment opportunities – and the comment we make at the end concerning Clarke Energy Fund Management (CEFM) who carry out this very thing, or you can visit their website directly at http://www.cefmoilandgasinvestments.com/
Five Truths To Consider Before Investing
Whenever you invest, it does involve taking some chances, whether small or large. The large the single investment the larger the risk. I say ‘single investment’ because you can, of course, limit your risk through diversification, but no investment is without some level of risk, no matter how small.
Over the years of either working within the financial industry or coaching individuals and couples on finance, there have been a number of truths that have continuously cropped up over time, that I have either found myself warning investors about, or I have seen occur, because investors have not heeded the warnings, so I want to share them with you now, so that you don’t make the same mistakes others before yo, have made.
These truths are extremely obvious, but you will be surprised how all too often they impact on a persons or couples lives, probably because they are so obvious, people tend to not take them seriously. I hope you do, regardless of how obvious they may seem.
Truth #1 – It is easier to lose money than it is to make it.
Of course it is, you say, but as I’ve mentioned already, so many people ignore this truth and wonder why they are worse off after investing than they were when they started. It is never a good idea to put all the money you have set aside for investing, into one investment because that simply turns investing into gambling as I mentioned is recent post, nor should you allow yourself to be pressured into investing more than your want. If you are looking for a fast return, the chances of losing your money increase. Understand what your money personality type is first before looking to diversify your investments so as to limit your losses and increase the possibility of a healthy ROI.
Truth #2 – The lack of money is the number one cause of relationship breakups.
If money is scarce or you are on a tight budget, it can be tempting to invest in helping increase your financial status. It doesn’t matter whether the investment type is in stocks, bonds or a second business, or becoming self-employed if you get it wrong the strain on any relationship that you are in can be catastrophic. I have witnessed first-hand marriages destroyed and families being torn apart because of a lack of money, primarily because of bad investment choices.
Men/Husbands if you haven’t realized this already you need to realize it fast; no matter how independent your woman may be, she will always want to know that her man can take care of her financially and if you have children together, that you will always provide for them too. If you don’t have spare cash to invest, don’t risk investing what you do have, for the sake of a few extra bucks every month. Look to invest in yourself first, maybe take an evening class to add extra skills so you can apply for a better job, maybe look at what expenses you can cut back on first before adding to them.
It is important to understand that financial investing is not the best way to improve your financial status if your status is currently a poor one. It is better to have a poor financial status temporarily that you can improve, together over time, than a poor or even broken relationship because of rash investment decisions.
Truth #3 Be a good investor by securing a home.
Property investment is one of the few investments that provides a good return on investment. Over the past 40 years, property investment has only ever provided a negative return on 5 separate occasions. Additionally, the key to making money with property is to only sell when the market is up, if the market is down, hold on to your investment. Owning a home provides a greater return and security than renting. When renting you are not securing a financial future, you are only lining the landlords pockets. Securing a mortgage within your financial budget and providing security for your family and future is one of the best investments you can make.
Truth #4 Paper investments are only worth the paper they are written on.
When making an investment, you need to ensure that you are able to release or obtain cash quickly. Investing in paper investments (It is an investment in anything but a hard asset because you only have a piece of paper to show for your ownership) is not cash until you turn it into cash. So if you are looking for a return within a certain period, you need to make sure that if you have a paper investment, you are not tied to it for longer than you anticipated. For example, you take out a mortgage to buy an investment property, you work on the property, improve it and look to flip it for a good return on investment, but unfortunately your mortgage has tie-ins and fees for early completion and they eat massively into your profit. Also, consider the time frame you will be using a paper investment before you get involved in one, because as I said, it worthless if you can’t cash it in.
Truth # 5 Borrowing money to invest is a fast way to financial ruin.
If you take into account the first truth, then you will understand why this truth should certainly not be ignored. It doesn’t matter if you borrow from a bank, on your credit card or from family or friends, the money has to be paid back, and while you are waiting for your investment to mature, you are spending cash to continue paying for it. Furthermore, a bank or credit card is going to charge you interest, so if your investment doesn’t return the yield you had hoped for, you now have extra money you have to pay back too. Borrowing money to invest is a minefield that you simply can not get through unscathed and is therefore not worth the risk.
I appreciate that these truths are not the most upbeat and encouraging, but they were never meant to be. Sometimes we need to be warned of the dangers ahead before we get into something that will lead us to ruin, and if it takes five short truths to protect you making a big mistake with your investments, then that is certainly a good thing, so I hope they help you as much as they helped others I have shared them with.
Another Warning Concerning Imminent Stock Market Crash
In the last few days, we have seen yet another financial expert make the claim that a stock market crash is imminent and advising that investors would be prudent to diversify and create a safe haven in gold
bullion which has already risen 3% this year so far and is currently at $1,106 an ounce (at time of writing).
Marc Faber, author of the Gloom, Boom & Doom Report,a Swiss investor, investment banker and fund manager, stated in a recent
interview with MarketWatch that the stock-market downturn could result in stocks hitting lows not seen in five years. He went on to warn that the S&P 500, which dropped to 1,881 1/20/2016, could drop to its 2011 low which was below 1,200.
Now, what is the main factor for the sharp drop in the stock market and in financial liquidy worldwide? Well, Faber stated, just as we wrote in our previous article on the historic breakout of gold from oil, that this current worldwide financial concern, is because of the continuing drop in oil prices.
Faber also went on to state that the current low price of crude oil indicates a shrinking global economy. “When oil prices increase, it basically is a consequence of expanding [global] liquidity,” Faber said, so inversely, this unrelenting fall suggests contraction. As we write this, the current price of oil is at $27 a barrel, the lowest it has been for over 12 years.
So if oil continues to drop and the stock markets around the world continue to be affected by it, what can investors do? In an interview with ETF.com from December 2015, Faber was asked what investments did he think were of value? His answer was interesting. He said; “Again, if you said, “Marc, here is $1 million, but you have to put everything in either gold or in the Dow Jones,” then I would say I’d take gold.”
In my previous post, I talked about the risk of investing crossing over into gambling; diversification is one of the best ways to prevent that from happening.
Gambling is all about putting all your eggs in one basket, betting the pot on one result, whereas diversification is about spreading the risk so that if one investment goes sour, you have other investments in other areas that can cover the loss.
One of the main keys to successful investing in starting with the end in mind. What I mean by that is, strong and successful investors know before they begin, what the outcome is that they want to achieve. If the aim is to create an income for retirement then the fund will need to be made up of the safer assets available, like bonds, property and cash, funds that have a low loss rate. If the aim is to generate income now, or your preference is a higher risk, then stocks, options and futures etc will be a better fit.
Whatever the preference, remit or style of your investing, the key is to know what you want to do before starting, and then ensuring you don’t invest in just one area.
But let me explain why diversification when investing is important.
Let’s say you were to put all your money into property development. This is something a lot of people did pre 2008 and when the housing market collapsed, their investments disappeared. Or imagine if your portfolio is made up only of stocks in the oil industry, with the price of oil continuing to fall right now, your portfolio would be looking rather depleated with no view of a recovery in sight. But if you had some of your portfolio in oil and some in renewable energy, then when one is down, the other prevents you from losing everything.
The best type of investment diversification is spreading your investments across a multitude of investment types and industries. So if you go for a mix of stocks and mutual funds or ETF’s then also diversify further by spreading them across different industry types like construction, transport, health sector and so on.
Diversification is the best way to protect yourself from mass loss. It is not a completely fool proof way, nothing is, but the more your diversify by putting your investments in many baskets compared to putting all your money in one basket, the more you protect yourself when one basket is hit. Every person I have ever coached, worked with or talked to who lost everything, did so because they put everything into just one or two investments. Everyone who I speak to who has diversified their investments suffers the odd loss now and again, but I never see them panic, because they have that safety net that is diversification, in place.
There are a lot of people who invest, who will tell you that investing is nothing like gambling, that gambling has everything to do with luck only and investing is all about reading the markets and making decisions off data, or it’s investing in an a fund that does guarantee a return over time, something gambling can never do.
Although this is true, it is only to an extent. There is an occasion when investing becomes gambling and any so-called guarantees that an individual was hanging their investments on, goes out of the window.
To understand this let me explain the premise of gambling. Gambling is all about betting on one thing happening over another. Whether it’s betting on black over red, one horse over all the others, The Yankees over the Red Sox, or even your stock going up and others going down, gambling is about betting on something specific happening. Take a coin toss for example. You toss a coin and you call tails, but it comes up heads, so you call it again, and again it comes up heads. The odds of it coming up heads a third time are now even greater, so therefore, the chance it will land on tails has increased and so you now bet $10 on the coin landing tails. Having placed your bet, you toss the coin and it lands on heads again. OK, the next toss has to land on tails, so you double your stake, toss the coin and it comes up heads a fourth time. You go through this process ten times, each time doubling your stake and each time losing. That original $10 bet is now a $20,000 plus loss.
This is where gambling and investing cross over. A leading investment expert goes on MNBC or Bloomberg and says that the market is going to go down. Right now there is a lot of chatter that we are potentially moving towards a bear market, but on what basis is that statement made? It is purely made on the direction the market took last month. As a result of the statement made, people then adjust their investments to be in line with a bear market, but making statements purely because the previous month was down, is no different from saying the coin has to land on tails this time because the last 6 were all heads.
History cannot tell us how something is going to turn out, it only tells us what happened. So just because you had a certain number of months of negative results, doesn’t mean that it is going to continue for another three or four months, but neither can you say that because we have had 3 months of negative results we are bound to have good ones now because the same thing happened in ‘1990 whenever.’
Investing is about reading the here and now, not hoping that it will turn or that history will repeat its self. Having that mindset leads to being overly confident – a ‘one day it’s going to turn it has to’ attitude, and all the time you are increasing your investment with the view, your luck has to change soon and you will recoup those losses.
Unfortunately, that is not how it works and like many gamblers who walk away from the table full of regret and remorse, so do investors if they allow investing to cross over into gambling.
Do you know your money personality type?
When it comes to handling money, we all fit into one of three personality types, spender, saver or investor. Having said that, it is not as easy as saying you are a clear spender or certainly a saver because we can easily cross over from one group to the next. Sometimes we may be a saver and at other times we spend. An investor may switch to saving at times and a spender may spend the majority of the time, but also save a bit each month. The point is, we are not definitely one over the other two, we filter from one to the other at different times, so the question is which money personality type, do you predominately fall into?
Below you will see a series of statements for each personality type. If you answer the majority of the statements within a personality type in the positive, then that is the preference you have when it comes to dealing with money.
Are You A Spender?
- You tend to have too much month left at the end of the money
- You have an eye for the latest gadgets and toys
- You have more than one credit card
- You love to buy one get one free offers
- You don’t like waiting for the sales to start
- You have a wardrobe full of clothes/shoes you hardly wear
- You love to treat friends when out, maybe with drinks or meals
- You buy magazines but rarely read them
- You live, for now, the future and retirement is something you will deal with later
- There are times when you struggle to pay your bills
Are You A Saver?
- You have money left over at the end of the month
- When you go shopping you know what you want because it’s on your list
- You use a bank/debit card rather than credit card
- You are happy to wait for a deal rather than buy it now
- You have a savings account / retirement plan in place
- You shop around for the best savings plan with the best interest rates
- Paying your mortgage/rent is more important than filling your house with gadgets
- You stay in more weekends than going out
- You read books rather than glossy magazines
- You take a lunch to work, more often than buying lunch
Are You An Investor?
- You have money in other accounts rather than just your bank account
- You have set money aside for life’s emergencies
- You have investment accounts that pay more interest than your standard bank account
- You are always looking for ways to invest your money
- You can’t remember the last purchase you made
- You have a plan to pay off your mortgage ahead of time if haven’t done so already
- You don’t have any debt
- You are comfortable making a loss with investments from time to time
- You prefer to put your money in long term investments (5 years+) rather than buy the latest ‘thing’
- You know the names of the presenters of CNBC rather than the characters of The Bing Bang Theory
Having gone through the lists, which money personality type are you?
If you want to be an investor, but you came out predominately a saver, well its only a short step to moving over into investment and making a few adjustments. If you came out a spender, you are going to have to look at a making some lifestyle changes, if you really want to begin investing for your future, and the main change you have to make is switching from a spender to a saver.
If you are a spender and do want to be an investor, the best way is not to try and do it immediately. Start gradually by making note of all your monthly spend and cutting back on the purchases that are ‘wants’ and not ‘vital needs’. If you have any debt, look to clear that debt as quickly as possible and as you begin to gain extra money each month, resist the temptation to spend it, but rather start investing small by placing it in a good saving account with reasonable interest.
There is a lot more that I can say on turning from spender to investor, but the purpose of this post was to help you ascertain your money personality type. If getting out of debt is a priority to you, then I recommend you check out the various programs on offer from daveramsey.com
If investing is something you want to consider, I do have a section on this site covering the various types of investments, or you may want to check out information on gold investment companies if you want to invest in something different, like precious metals.
Earlier this year, CNBC ran a sequence of articles where they raised a number of valid and important questions as to why Russia wants more gold. (source)
The Central bank of Russia has announced plans to increase its reserve level from $300 billion to $500 billion. Now how Russia plans to do this is unclear, however lets look at three major facts for a moment that have negatively impacted on the Russian economy:
- Russia has for some time been trying to stabilise the value of the Russian currency, the ruble, by selling a mix of currencies including the US dollar.
- Its war with the Ukraine has brought about sanctions that has put them under economic strain
- As the world’s leading energy supplier, the fall in the price of oil has impacted on Russia greatly.
These factors, along with others, have contributed to the economy of Russia to actually contract by 1.29% and this is a result of 12 months of continual contraction.
graph courtesy of http://www.tradingeconomics.com/russia/gdp-growth
Now when you consider that Russia is the largest country in the world and the fifth largest economy, along with being the world largest producer of oil (no it’s not Saudi Arabia, there output is only 13% compared to Russia’s 14% (figures courtesy of Wikipedia)) along with gas, you can see why having a stable economy is vital.
So how are they going to do it?
Well one of the fastest and most common ways to bolster an economy is through the purchase of gold. In an article on CNBC, they stated:
“Rumors last week that Russia was on the verge of selling its gold reserves were quashed with the news on Friday that it has continued to add to its holdings. However, John Butler, chief investment officer at Atom Capital, and Alasdair MacLeod, the head of research at online bullion exchange GoldMoney Foundation, believe that Russian President Vladimir Putin could bring the country onto some sort of “gold standard” to try to shore up its economy. “
It is no secret that Russia does have an interest to distance itself from other currencies that are inflating in value. Putin wants to base the Russian economy on sound investments and the best way to do that is, through gold.
What evidence is there to suggest that?
Russia increased its holding of gold in December last year to just over 38 million ounces, an increase of over 1 million ounces from the previous month (source) and it continues to do so each month. Although the country is a long way off from having a currency that is backed completely by gold, it is moving in the right direction
When it comes to precious metals, gold is usually preferred by more investors than silver. However, what you need to understand is that just because gold is more popular does not mean silver is less attractive. In fact, adding silver to your portfolio is a great way to diversify and protect your investments. There are two types of silver commonly traded in the market today, and these are silver bars and silver coins.
If you are wondering which one you should go for, the answer is that both of them make for good investments. However, there are certain characteristics that make silver coins more desirable. For starters, silver coins can be bought and sold more easily than bars. When selling bars, you do not have the option of selling a portion, either you sell everything or nothing at all. This is not a problem that is experienced with silver coins.
The fact that silver coins are government-minted is another reason why many people tend to trust, and want to invest in, silver coins. Even when silver prices wildly fluctuate, it is unlikely for government-minted coins to be called into question. It is also important to remember that coins are universally accepted, and so for an investor, it makes a lot of sense to invest in silver coins.
The gold/silver ratio analysis shows that investing in silver coins is a wise move. This ratio is used to determine the absolute and relative prices of gold and silver, and while it currently stands between 50:1 and 60:1, it is expected to normalize to 16:1 in the near future. Coupled with declining below-ground supplies, it is expected that silver will be a much sought after commodity in the near future.
It is also important to remember that silver has a wide variety of uses, especially in the photography industry. As demand for industrial silver soars, it is expected that owners of silver coins and even silver bars will get great returns on their investment.
Investing in precious metals is a great way to approach diversification and protect your portfolio against economic fluctuations and inflation. And while some investors are skeptical about adding precious metals to their portfolio, those who have report no regrets. Go ahead and get yourself some silver coins. You do not have to invest all your money in them; you can simply set aside a small amount to invest in silver coins, and decide how to proceed based on the returns you get thereafter.
If you are interested in investing in silver, be it coins or bullion, then if you live in the US, check out my recommended silver coin and bullion supplier. If you live outside the US then check out this leading supplier of silver.
The Gold Market has Just Experienced A Historic 70 Year Breakout From Oil
A recent article on King Word News reported that the gold market has just done something that it has not done for 70 years, and that is it has held its price while the crude oil market continues to decline at an alarming rate. There have also been a number of reports in the financial media that gold too is on the decline, yet when you look at how gold has been performing over the last 12 months, it has fluctuated between $1250 and $1005 an ounce. Compare that to oil on the other hand over the same 12 month period and you will see that oil has dropped from a high of $60.13 a barrel to its current price of $31.35 a barrel.
As you can see from the chart to the side, both oil and gold have historically (although the chart only goes back to 2006) over the past 70 years, run almost along side each other, albeit except through the recession of 2008/2009.
What this chart, along with other data shows us, is that although gold has dropped in price since its 2012 peak, compared to other commodities and in particular, oil, it is performing very strongly, in fact, it is holding.
So what we are seeing here in this historic breakout, through gold holding its price while oil collapses, is that Gold is possibly now entering a bull market. It is of course too soon to predict, and many experts are saying although gold is not in a bull market yet, it is coming in 2016, the question is when?
What this separation from oil has shown us is that a bull market is getting close, closer by the day. Check out BullionVault for more information on gold investing