All That Glitters Is Still Gold, but Should You Buy It?

Everywhere you turn these days, it seems as if someone is telling you that now is the best time to invest in gold.

Should you consider it?

Historically, gold has been considered a “safe haven” in times of economic, financial and geopolitical instability. This is certainly the case today, given the debt crisis in Europe and unstable political environments in other parts of the world.

Inflation and currency devaluation are good reasons to invest in gold, because it holds its value. And there is potential for those conditions to develop today.

Gold’s greatest advantage is that it performs differently from other assets, which is why many recommend gold stocks as a way to diversify a portfolio of stocks, bonds and real estate. This helps protect against inflation, debt default and bad investment climates.

That said, no investment is a sure thing, and gold is no exception. That’s because its price can fluctuate widely. For example, it declined from more than $800 per ounce in the 1980s to $250 in the 1990s. Since then, it’s been on a tear, and in October of 2012, exceeded $1,700 per ounce.

If you’re interested in investing in gold, you can do so in a number of ways, from buying gold itself to buying stocks of gold-mining and gold-producing companies. The latter is simpler, as it allows you to obtain the potential advantages of rising gold prices without physically taking possession of gold. But buying gold stocks can require some research. Discuss it with a financial professional.

Tips for Managing Your Finances in Retirement

Living in retirement isn’t always life at the beach; it requires an understanding of key financial issues and careful planning, as well as a close, positive relationship with your financial advisor.

For a stress-free retirement, here are three of the most common mistakes that people make, along with suggested strategies for avoiding them.

Mistake #1–Spending too much too early

  • Periodically re-evaluate your budget to ensure it’s still realistic.
  • Determine how much you need to put aside to sustain your budget throughout your retirement.
  • If your savings don’t match up, gradually pay down debt and increase annual savings.

Mistake #2–Not knowing the consequences of taking distributions

  • Don’t withdraw funds without knowing the rules governing withdrawals.
  • Decide whether you can put off taking distributions until you reach age 70½, so your money can continue to grow tax-deferred.
  • Plan your distribution payouts according to your life expectancy. Withdraw as much as you need for living expenses while keeping the bulk of your assets working for you.
  • Withdraw first from savings and taxable investment accounts; only then turn to tax-advantaged accounts.
    • When you do tap tax-advantaged accounts, know the consequences.
  • Consider opening a Roth IRA. You can also roll over amounts in a Traditional IRA to a Roth IRA, if certain conditions are satisfied.

Mistake #3–Not knowing how and when to grow your assets

  • If you need your assets to grow over 10 years or more, consider putting the majority in stocks.
  • If you require current income, consider investing the majority of your assets in bonds.
  • If you seek stability of principal and don’t need to grow your assets, consider putting the majority of your portfolio in cash equivalents.