Investing For The Far Off Future

I am 20 years old. I have about $5,000 worth of gold and silver right now. I have been collecting for about 5 months. I am planning to keep what I get until I am going to retire. Is this a smart way to invest? I am just putting about 85% of my extra money into bullion.

 

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Sir, I would advise diversifying your holdings. Just like you do not want all of your money in stocks, or bonds, or property, or any other single asset, you do not want it all in PM either. I applaud you wishing to save for retirement, many 20 years olds do not, but please look at a diversified mix of assets.

Chris

 

I agree with Chris' comments above. And although you may seem to have everything together, I can assure you that it wouldn't be unusual for unexpected emergencies requiring funds to pop up before retirement age, and liquidity may be needed. Having funds mostly in a single category would be unwise. Best of luck!

Jim

 

30 years ago the best investments to be in were savings accounts, savings bond, etc. because interest rates were between 16% - 20%. Gold and silver would have been bad bets in that environment. An investment in the S&P 500 would not have kept up with inflation between 1980 & 1990. Between 1990 & 2000 the S&P 500 beat everything else because the Fed aggressively lowered rates and when they do that, the money ends up in the stock market.

Beyond that however the Fed's policies became destructive to the economy so from 2000 on, the S&P 500 hasn't kept up with inflation and has been subject to unprecedented, eye watering, volitility. This is where the era of Gold took over and those few paying attention got out of paper and moved to asset based purchases. (Not coincidently, this was also the rise of the Internet and for the first time, people had easy access to info not controlled by the status quo/MSM and could figure out what was happening.)

The point is that based on this history, you simply can't plan on any investment scheme holding for 30 years. There are those who will continue to pour money into stocks who won't take the 5 minutes to look up the data that I put in the paragraph above. Likewise, Gold was not a good investment for close to 2 decades. You don't want to get into timing the market as that is mostly a losing proposition too, but you do want to take stock of the situation at least every couple of years to see if change is required. Do your homework. I'd hold onto gold for now if you don't need the money but don't plan on holding it for 30 years.

Your best bet however since you are 20 is to stay out of debt. Debt is why so many people your parent's and even grandparent's age have no money. They gave it all to the banksters.

 

Welcome to CoinTalk! To be blunt, I think it is a stupid idea for a 20 year old. I would advise putting 100% of your savings into the stock market through either a mutual fund [requires research], index fund, or individual stocks [requires more research]. As long as you won't need the money to pay for cars, houses, etc... then the stock market is almost certainly going to outperform gold, silver, bonds, savings accounts and probably every other passive investment you can make. Consider that just through the normal growth of businesses through retention or earnings, reinvestment of dividends, and inflation, you are almost guaranteed to see the Dow Jones Industrial Average above 100,000 in your lifetime. It's a no-brainer for someone your age who is in a position to ignore the dips along the way or just use them as buying opportunities.

Good Luck.

 

If that 85% of extra money is discretionary income, then you can do whatever you please, although I'd prefer 90% silver coins, provided you have secure storage. Before too long you'll get into coins anyhow, and then get married, and your whole world may be turned upside down. HOWEVER if you are NOT truly talking about discretionary income, then heed all the advice above.

 

Don't put all your eggs in one basket! :yes:

 

I agree. Nothing is certain. But, I would certainly take the advice already given here and diversify. Even is bullion was 30 years from now what it is today and you had continued to place 85% of your disposable income into them, the taxes you'd have to pay when you liquidized them would probably offset any gains you made had you just put money into a savings account. Taxes are the number one stumbling block people fail to take into account when planning for retirement.
Guy

 

Guy I agree. It is also the singularly most upsetting point of our tax structure. So many people want to "get the rich" I know it won't change, but a large amount of taxes on capital gains are taxes on inflation. Buy PM today, assume it keep pace with inflation, and in 30 years you have about 80% of the value of what you sell as "gains". Its not a gain at all, its inflation, which is a function of government policy.

Basically, the government can increase inflation when it wishes to, then simply tax away any returns that go up because of it. Its more complicated, but I always wished they indexed your investment to inflation, then tax any gain as ordinary income. Much more fair, so of course will never happen.

 

Lol uncle sam used to want you now he just wants your money.

 

Welcome to CT. :welcome: I wish that I had started saving for retirement at age 20. Good for you. As others have stated, it may be wise to diversify. It is also a good time for real estate investment in some areas. TC

 

It's worse than that -- not only can the government have affect inflation through policy, but it can redefine the inflation index as it likes.

I wish I could have "invested" in groceries, which have strongly outpaced the reported "inflation rate" over the last couple of years.

 

Aww, come on. My bread has always cost $3 a loaf, no inflation there.

 

My wife makes our loaves of bread, that $3 you spend could make 3-4 for us and it's tastier.

 

I am in college and have a job. My parents pay for everything though. Yes, I am spoiled...etc.

So you guys are saying I should be putting it all in the stock market right now? Or half bullion, half stock market?

I am clueless on the market. Everything is down right now, so it would be a good time to buy?

 

They in fact do this as a matter of policy. There is a name for it, which I don't remember, but basically their policy is that if price goes up for a certain item, they will substitute a cheaper alternative. Their reasoning is that if prices go up, then people will switch from steak to hamburger so they change the index to reflect this. In otherwords, it's mostly useless except to make those in government look good and to limit payments to those who have an indexed payout to the CPI.

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I do the shopping for the household, I pay attention to prices, and there has been a shocking increase in basic ingredients such as oatmeal, sugar, flower, cooking oil, beans, flour over the last couple of years. There has been an even bigger increase in processed food but they have been using a lot of packaging tricks to compensate for that.

 

Even worst is the "better product" assumption. They say a new car didn't go up 8% because its a "5% better car, so the price only went up 3%". That is the "corrections" to the CPI that really grinds my gears. Basically they are saying they KNOW our out of pocket expenses are going up, but its not inflation since we are enjoying better quality products. To me, what leaves my wallet is my inflation, what it costs me to live.

 

I say make sure you are debt free, then build a savings account for emergencies, then spread your money around some. If you are like most of us, you will not always be right, so better to have your money in a lot of different fields so as to minimize your risk.

My opinion anyways.

 

Yup, that's why I'll say it again, "Don't put all your eggs in one basket!" :yes:

I've heard of way too many people losing their retirement because they did exactly that, kept it all in one place or investment by not spreading it around.

 

Actually the market has been going up lately and a lot of good stocks are near their 52 week highs. If you want to buy on a dip I'd wait.

I agree with the rest of the suggestions here.

Also a book I enjoyed for a diversified portfolio:
http://www.amazon.com/Fail-Safe-Inv...GG/ref=dp_kinw_strp_1?ie=UTF8&m=AG56TWVU5XWC2

I dont exactly follow it but I thought it was interesting and is a good example of not putting all your eggs in one basket.