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Investing Gold: Is It Time To Open A Gold Individual Retirement Account?

When it comes to opening and individual retirement account (IRA), the first thing that comes into most people’s mind is bonds, stocks and mutual funds. However, with the uncertain state of the economy all over the world, most investors are looking for other IRA investments options. Take gold for instance. To most people, gold is an unlikely investment option. However, when you look back in history, gold perpetually rises in worth whenever there is a fluctuation in the economy. This Investing Gold IRAhappens when the “sharks” in the investment world opt for safer options. Gold is a great investment in many ways. For starters, gold does not seize in value, no matter the state of the economy. Experts compare gold investment to allowing your money to earn interest in a bank. Here are some of the factors that make gold IRA investment a great idea.

What is A Gold IRA

Gold IRA refers to an individual retirement account which is opened to store gold and other precious metals. This account works the same way as a regular IRA, only that gold bars and bullion coins are stored, instead of paper assets. Also, unlike regular IRA, gold does not allow one to collect interest when they finally retire at the age of 70. This is one of the reasons why most people do not consider this investment option. Others are simply not aware of the benefits of opening such an account. While it is not possible for people to collect interest from this type of retirement account, the long term benefits are far more attractive. Between the years 2004 and 2014, gold has experienced a steady increase in worth, compared to the dollar.

There are many different factors that make gold appreciate in value as time goes by. For starters, there is not enough supply of this precious commodity to satisfy the demand. When supply is low, the price goes up. There are not enough gold deposits left in the world to affect the price of gold in a negative way. Statistics show that depreciation in value of gold over the past few years was minimal and hardly made a difference.

Gold Stockpile

A Strong Case for Gold Investment

Financial experts and other investors predict that the price of gold will rise in the next few years. Some claim that it could go as high as $10,000 an ounce. While these predictions are not certain, one thing is for sure — with the rising number of people investing in gold; its price will definitely go higher than it currently is. The cost of gold rises based on events that lower the value of bonds and stocks.

Preparing for Tough Times

The number of people buying gold seems to increase as time goes by. For this reason, it would be wise to store it in an IRA, which will secure it for the future. Traditional retirement plans have had their fair share of downfalls, as seen in the past couple of years. Those who took the chance and invested in gold are smiling all the way to the bank. This is not to say that the ship has sailed. According to most financial analysts, this is a great time for investing in gold and secure your future. Investing in stocks and bonds is a risky venture in many ways. The dollar seems to depreciate in value as each year goes by and the future is not certain. The recession took its tool on many people who were not prepared for it. An investment with irrelevant or no risk such as gold can protect your future and that of your family.

Investing Gold IRA - Investing Gold Rollover You Can Use your IRA to Buy Gold

Not everyone has enough money stashed away somewhere that they can use to buy gold. Luckily, you are now able to use your retirement money for investing gold. After careful consideration, most people have realized the benefits of gold investment and are using their retirement money to invest in gold. This is a fairly easy process that doesn’t take a lot of time or effort.

Self-directed IRA Investment

The current 401k does not allow you to own physical precious metal. For this reason, you will have no choice but to roll over your gold investment into self-directed gold IRA. This account does not limit you to precious metals when it comes to investing. You will also be putting yourself in a position to enjoy tax benefits associated with such a retirement account.

The dollar has declined in value and the future does not look bright for most investors. The Federal Reserve is engaging in unlimited money printing known as Quantitative Easing 3 (QE3). This has led to rapid decline of the dollar making it a doubtful retirement investment plan. Investing gold gives you peace of mind by removing all doubt.

Loans: The Good And The Bad

good debt and bad debtDebt has a bad name in the United States. With risky lending practices widely credited for sparking the Global Financial Crisis of the late 2000s, Americans have been shying away from consumer credit in droves. We are constantly reminded of the sky-high interest bills we are racking up, and collectively hold over $3 trillion in consumer non-mortgage debt.

However, not all debt is bad. In fact, most of us with dreams of owning our own homes will have to carry some debt at some point in our lives. Make sure you understand the difference between ‘good’ and ‘bad’ debt before you head to the bank to take out a loan.

“Good” debt

While nobody likes having to pay interest charges to the bank, debt can help you achieve your financial goals if used responsibly.

Debt is generally seen to be ‘good’ if it is taken out to purchase a wealth-building, or appreciating, asset, such as a house to live in or for an investment.

In some cases, the interest repayments may be tax-deductible, and the asset can help you generate wealth over the long term. For example, a mortgage taken out to purchase an investment property can be paid down over time using rental income and then sold at a profit, or capital gain.

In the above example, if the amount of rental income and capital gain exceeds the amount of interest paid on the mortgage, then a profit has been made, and the debt is considered to be ‘good’!

Taking out a loan“Bad” debt

When self-help books, daytime TV personal finance gurus and wealth seminars talk about reducing debt, they don’t normally mean the mortgage. ‘Bad’ debt, or the personal loans and credit cards that keep us up at night, are named as such because they build wealth for nobody except your local bank manager.

Personal loans and credit cards are the most obvious example of bad debt. These forms of credit are typically taken out to finance some sort of lifestyle luxury, such as holidays or a new gadget, and are rarely used to build wealth. These forms of lending are riskier for the banks, and therefore have higher interest rates attached. The interest payments are ‘dead money’, with no income produced from the money that was borrowed.

Although car loans are attached to an asset in the form of a motor vehicle, they are also grouped in the bad debt category. This is because cars generally depreciate in value, rather than increase in value, over time, and do not generate capital gains in the way property does. Borrowers of this type of credit often find themselves in ‘negative equity’, meaning they owe more on their loans than the asset is worth!

Turning “bad” debt into “good”

While the best way of handling bad debt is to pay it off, this is not always possible. Credit cards can be especially difficult to pay off, and it is hard to pay off car loans in one hit without selling the car itself.

One way of dispersing the storm clouds is to consolidate. Managing several credit cards can be expensive, with different sets of fees and varying monthly repayments, and many borrowers often find themselves essentially paying off one credit card using another.

While hardly a form of ‘good’ debt, a debt consolidation loan can be much easier to manage than several different personal loans and credit cards. They typically attract a lower interest rate than credit cards, and feature one monthly repayment to make instead of several smaller ones.

In addition, a fixed debt consolidation loan can also assist in maintaining the discipline required to pay off large amounts of ‘bad’ debt. While many credit card debtors have the best intentions of paying their card balances down, many struggle to stop using their cards, even if they are cut up (remember, online purchases only require a credit card number and expiry date!). A fixed debt consolidation loan without a redraw facility will have a constantly reducing balance, meaning each payment brings the loan one step closer to being paid off.

good debtKeeping “good” debt as “good”

Banks realize that credit-savvy Americans are beginning to understand the distinction between good and bad debt, and are coming up with new ways to keep credit-shy home owners on their balance books.

One ‘feature’ of home loans that has been heavily promoted recently is the line of credit, or revolving equity loan, that allows a borrower to continuously top up their home loans up to a set limit, usually 95% of the value of the property.

These funds can be used for any purpose the borrower desires, and many banks even offer such lines of credit with a debit card facility, meaning borrowers can essentially buy their groceries by borrowing against their home equity!

The best way to avoid such pitfalls is to get a no-frills, principal and interest home loan with no or low ongoing fees. The bells and whistles offered on many of the major banks’ home loans can often end up costing more in ongoing interest payments than the annual package fee would suggest. Smaller lenders often have great deals on these types of ‘basic’ home loans, so it pays to shop around.

Dealing With Debt: Four Easy Ways

Dealing With DebtDealing With Debt

Debt is a cycle, and a difficult one to get out of. Taking on debt requires a portion of one’s regular income to be diverted to repayments, and when living expenses cannot be covered by what is left over, more debt is taken on. This increases repayments on debts, leaving even less for living expenses, and so on.

For those who feel drowned under the weight of ever-increasing cost of living pressures and debt repayments, there is a way out. Read on to discover four easy ways of dealing with debt that could help you break that vicious cycle.

The ‘domino method

This simple debt reduction method is easy to budget for, and gives the added benefit of getting a great morale boost every time a debt is finalized, falling like dominoes.

First, write down your debts in order, from smallest (e.g. store cards) to largest (i.e. large car loans or even your mortgage). On the largest debts, make just the minimum payments for the time being, while pumping as much money as you can comfortably pay towards the smallest of these debts to finalize it as quickly as you can.

Once the smallest debt is paid off, move down the list and start making the payments you were making to the now-finalized debt towards the next-smallest liability, in addition to the minimum payment you were already making.

Rinse and repeat. Over time, you will find your debts will start falling over like dominoes – each time you pay one off, you focus all your energies on the next one!

Dealing With Debt: ConsolidationDebt consolidation loans

If making even the minimum payments on all your debts is not affordable, consider taking out a debt consolidation loan to bring all your debts under the one roof, with one regular repayment. This can help to reduce the minimum payment to a level that is manageable, freeing up funds for living expenses or even savings.

When taking out a debt consolidation loan, it is important to close the credit cards the loan will be paying out. Countless debtors consolidate their debts but leave their credit cards open “just for emergencies”, and find themselves six months down the track with the cards maxed out again, leaving them in a worse position than when they started! If you must leave open a credit card, reduce it down to a manageable limit and ask your card provider not to send you limit increase offers in the mail.

Those considering debt consolidation options should shop around to ensure they are getting the best possible deal. A number of unscrupulous lenders advertise ‘fast approval’ and ‘no application refused’, but end up stinging their customers with up to 35% APR, which can leave the debtor paying more interest than if they had left their debt unconsolidated.

Informal arrangements with creditors

If your debt is becoming so unmanageable that you are struggling to make even the minimum payments, consider contacting your lenders’ hardship departments to enter into an informal agreement to reduce your required repayments.

Most lenders would prefer their borrowers contact them to discuss their options and potentially end up on a reduced repayment amount for a few months than having to send in the debt collectors. Some lenders will require you to submit a budget to prove you are in hardship, whereas many banks will reduce your interest rate in special circumstances for six to twelve months by simply giving them a call.

If your bank refuses to enter into a payment arrangement, stand firm and keep pushing. Remind them that if they do not agree to something you can afford, they will eventually have to call in the debt collectors, costing them money in referral costs. Let them know that it would be easier for them if they would simply agree to an arrangement now rather than wasting time and money chasing you up later on.

Dealing With Debt: Filinging For BankruptcyBankruptcy

Bankruptcy is a last resort and should only be considered when all other options have been exhausted. It is generally suited to those who cannot afford even a small repayment towards their debts every month, such as the long-term unemployed or those who have been involved in a failed business.

Remember, there are a number of restrictions on undischarged bankrupts, depending on your country of residence. For example, in most countries, a bankrupt cannot borrow more than a certain amount of money, or even write a cheque, without disclosing their status, and there can be restrictions on travelling overseas.

In addition, a bankruptcy remains on one’s credit record for a long period of time (in some countries, for life) and can cause difficulties when applying for credit in the future, for instance when purchasing a first home.

It is recommended that anyone considering bankruptcy speak with a licensed financial planner or counselor prior to making their decision.