Precious metals for as long as we know have been used for financial purposes. People often believe they offer so many advantages when it comes to investments.
However, when considering investing in them, there are so many factors to consider. One of such considerations is how to invest since there are several ways they can be held, from ETFs to common stocks, certificates, holding it in its physical form, and so much more. You can visit https://en.wikipedia.org/wiki/Exchange-traded_fund to find out everything you need to know about EFTs.
Since they are so many options, you may get confused about which to go with at some point. However, knowing the benefits which some of these options offer you can help your decision-making. Hence, in this article, we will analyze the benefits of one method, investing in the physical forms of precious metals.
However, because there are often two sides to everything, we will not just stop at the benefits, but we will go further to consider some of its cons. We believe after reading this article, you will be better informed to either cross this method off your list or become more interested in it. Before we begin, know that no method is the best; however, each offers some pros or cons that may either fit your needs or negate them.
Benefits of Investing in Physical Forms of Precious Metals
Below are some of the major advantages you stand to gain when you have physical metals:
1. They are Tangible Assets
This is perhaps the most common reason most people opt for this method. When you invest via other methods like ETFs, stocks, or certificates, you cannot touch or feel them. But in this case, you can hold your asset whenever you want to, especially if you are storing it yourself.
What is more, they can’t be spoilt by water, fire, or time even. However, with silver, you may need to care for it from time to time.
2. Are Confidential and Private
You cannot say this for most assets in our world today. However, when it comes to wealth, sometimes, some persons prefer more confidentiality and privacy. If you are one of such persons, then a physical metal may just be what you need.
3. Ideal as Legacies
Most parents want to leave some sort of legacy behind for their children when they pass on. If you are considering what to give to your heir(s), then this may just be it.
Why is it an ideal asset to pass down to heirs? Well, it is simple, physical precious metals have been proven to retain their value over periods. They are also a hedge against inflation which means no matter how bad the economy gets; they would be sure to retain some value. This is a needed factor if an asset will be passed down from one generation to the other.
Finally, they are tangible, so passing them will not be difficult.
4. It Is not Susceptible to Being Erased or Hacked
In these modern times, almost everything we do is digital, and this extends to how we own wealth. Most of our wealth is stored digitally. The downside to this is that they can be erased or hacked; some persons’ bank accounts may have been hacked at some point in time.
If this happens and all you had was in that account, it would be a great loss. You can read this to find out more on how to safeguard your bank accounts against hacking.
If you would like to diversify your wealth or investments outside the internet, then a physical precious metal is just what you need. It does not need the internet or electricity and is not digital in any way, hence, it cannot be hacked.
5. Specialized Knowledge is not required
Investments in other nonconventional assets often require that the investor has a little bit of specialized knowledge in the field. For instance, to invest in arts, the investor needs to have an artistic eye and should be able to tell a fake from an original, so they don’t get scammed.
With physical metals, you do not need any specialized skills, training, or knowledge before you can buy them.
Cons of Investing in Physical Forms of Precious Metals
Below are some cons of investing in physical metals:
You would need to store the physical metal bought somewhere. With other methods like stocks or certificates, you do not have to worry about storage.
When it comes to storage, two options are available to you. You can either store it in a high-end storage facility for a fee or store it by yourself at home. Both options put you at a disadvantage though, for the former, you must pay an additional storage fee. While for the latter, your asset can be stolen from your home.
The IRS recognizes silver and gold bullions as “collectibles”. What this means is that you have to pay at least 28 percent capital profits tax if you hold the asset for more than a year. For other methods like stocks, the tax rate is often relatively lower.
3. They Don’t Have Interest or Produce Income
When you invest in physical metals, you will not get paid dividends or interest. This is however not the case with other methods like bonds or stocks. However, this disadvantage is oftentimes not considered as a disadvantage because these metals do not have the purpose of producing income. Rather they mainly function as a value store and money.
Think of it like this, the paper currency you have does not give you any interest or income unless you buy a stock or bond that pays dividends or interest. This is because the currency functions as money. The same applies to gold and the rest.
Visit Provident Metals if you have decided to invest in physical metal and you would like to learn more about the options available to you. If this method does not suit your needs, then you may have to learn more about the other options available so you can make a great decision.
In this article, we have discussed some of the benefits of investing in physical forms of precious metals. We also discussed some of the disadvantages of this investment path. We believe this article has been informative and you can now make a proper decision.