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Gold and silver have always been in value. Should we consider them today as a means of preserving and increasing money? Debunking popular myths.
Myth 1. Investments in precious metals are the most reliable
Yes and no. Precious metals are always in price, even in times of global economic crises. But if we talk about short-term investments - less than a year, then investments in precious metals may not bring income or even result in losses.
Unlike securities and even cash, which sometimes - as history shows - turned out to be unsecured pieces of paper, gold, silver, platinum and palladium always have an independent value. In this sense, your investments are protected - the cost of precious metals cannot become zero even during periods of economic turmoil. On the contrary, in unstable times, their prices rise along with demand.
On the other hand, it is difficult even for analysts to predict income from precious metals. The prices are influenced by the world conjuncture of demand, and it is almost impossible to take into account all factors. The cost of precious metals fluctuates a lot literally every day. There were even periods of several years when their average annual price steadily declined. For example, from 2012 to 2015, the price of silver dropped by half and then began to rise again. But if you look in the long term, investments in precious metals are ahead of inflation, which means that your savings will really remain.
Conclusion: investing in precious metals will really help you keep your savings, but only if it is an investment for a long time - at least 10-15 years. In a short period of time, you have a chance not only not to build up, but even to lose part of your savings.
Myth 2. When precious metals become cheaper, you have to buy them with all your money, because then they will still rise in price
No and no. First, you shouldn't invest more than 10% of your investment portfolio in precious metals. Don't put all your eggs in one basket, even if they are golden or silver eggs. Secondly, you need to decide on the goal: do you want to make money quickly or keep your savings? The investment strategy depends on it.
If your goal is to get quick returns, follow the universal advice of financiers: Buy assets when prices are just starting to rise after a recession, and sell as soon as prices begin to decline. But to make money like that, you need to closely monitor the market.
But that's not all, you have to go against your psychology. After all, if after the purchase the price rises, there is instinctively a desire to fix this profit. For example, you bought a precious metal for $ 12 rubles and sold it during the growth for $ 17, and the price then increased by another $ 10.
Or, for example, after buying a bullion, the price has gone down, and you expect it to go up any time soon. Selling at a loss can be psychologically difficult. As a result, you can lose more on such mental vibrations.
At the same time, you should not buy and sell too often - after all, every time you pay a commission to the company through which you make transactions. All profits can be spent on this. Therefore, set yourself clear boundaries: how much it costs to wait to check the trend.
If you do not have experience playing in the market, it is better to invest for a long time - this way you will probably earn more. You can stick to a strategy where you will regularly invest a small part of your free money in precious metals, regardless of the price. For example, once a fortnight. In a few years, this tactic should be justified: the growth in the cost of precious metals will outstrip the inflation rate.
Myth 3. It is better to buy the most expensive metal, you can make more money on it
No not always. It all depends on your financial plans, the economic situation and the dynamics of the price of a particular metal.
You can invest in any of the four precious metals: gold, silver, platinum, or palladium. The most popular is gold. It is stored in the reserves of the central banks of all countries of the world. Historically, this is the most common form of wealth accumulation.
Silver is in second place. It is very affordable. Banks offer it both in bullion and in coins. Like gold, silver rises in price during an economic downturn, during periods of crises. From this point of view, gold and silver can be viewed as a form of savings insurance in turbulent times.
Platinum and palladium have entered circulation only in the last hundred years and have not yet received such distribution and recognition as an instrument of accumulation, as silver and gold. These metals are more used in industry, and therefore the demand and price for them increases during general economic growth.
It is even more important that the dynamics of the cost of platinum and palladium is much more influenced by production factors: the volume of production (and few companies extract them), industrial consumption, demand for cars (in the production of which these metals are used), and so on. That is, factors that are not directly related to the financial market, therefore, it is more difficult to predict them.
I want to invest in precious metals, what should I pay attention to?
Price
If you're willing to invest a little, the cheaper metal is fine.
You cannot buy a kilogram of gold for a small amount, silver is much more affordable - you can boo and take several at once. For example, on August 1, 2017, the price of 1 gram of gold was $ 40, and 1 gram of silver was $ 0.5.
Oscillation dynamics
For short-term investments, a more volatile metal may be suitable - one with the price of which fluctuates more. The value of silver, for example, changes more often and with a greater amplitude than gold. This means that you can quickly make more money on it - or lose more.
The dynamics of prices for precious metals can be viewed on the website of the Bank. Every working day, the regulator sets discount prices for precious metals, which are then used by commercial banks. The cost of buying and selling precious metals in different banks is different, as well as the buying and selling rates of currency. Compare information to find the best deals.
Liquidity
Examine how quickly and with what losses you can sell the metal. Banks set a commission for the redemption of precious metals - up to 30%. If you are not investing for several decades, it is better to invest in gold or silver. They are more liquid than platinum and palladium: they are easier to buy and sell at the best prices.
Myth 4. Only the rich can invest in precious metals - you need to buy whole bars
No, you don't have to be rich. You can invest at least one hundred rubles, at least one hundred thousand in precious metals. You can choose the option that suits you.
Buy ingot in a bank
This is how you get the pure metal.
Pros:
Minuses:
Buy investment coins from precious metals
The value of a coin is clearly tied to the value of the metal from which it is made.
Pros:
Minuses:
Open an impersonal metal account
This is the purchase of "virtual metal", you will not get it in your hands. It's just that your account will have grams of precious metal. To open such an account, you need a passport, TIN and money that you pay for the precious metal.
Pros:
Minuses:
Anya opened a compulsory medical insurance company in one of the banks on July 1, 2013. Then 1 gram of gold cost 1,333 rubles. She paid 13 330 rubles for 10 grams of gold. Four years later, Anya decided to close the account. At the time of the sale, on June 30, 2017, the bank was ready to purchase gold at a price of 2,228 rubles per gram, that is, for 22,280 rubles. Thus, she earned 8,950 rubles. That is, the profitability of its investment is 13% per annum. But if Anya wanted to take not money, but an ingot, then the profitability would have been different. First, she would have to pay VAT (20%). And with the remaining money, she could only get 8 grams of gold.
Invest in mutual funds
Some mutual funds invest in precious metals. You will not become the owner of bullion, but you will receive shares of the fund. The value of these shares will be tied to a basket, which will contain gold, silver and other metals in certain proportions. When what metal to sell and buy is decided by the management company of the mutual fund.
Pros:
Minuses:
Myth 5. Buying jewelry is also an investment in precious metals.
No, buying earrings and rings, you will never earn. Their price is 2-3 times higher than the cost of pure metal in them. And in the purchase or pawnshop they will be guided precisely by the cost of the metal. So, in the best case scenario, you can get back half or a third of your expenses, unless, of course, this is a heirloom of the royal family, for which connoisseurs of antiques are hunting.
In some countries, such as India or the United Arab Emirates, buying jewelry is tantamount to investing in gold. But there they are made of metal of a very high standard and are sold with a small mark-up - about 10%. In Russia, in most cases, both samples are lower and the mark-up is higher - you will hardly be able to profitably sell ordinary jewelry.
Myth 1. Investments in precious metals are the most reliable
Yes and no. Precious metals are always in price, even in times of global economic crises. But if we talk about short-term investments - less than a year, then investments in precious metals may not bring income or even result in losses.
Unlike securities and even cash, which sometimes - as history shows - turned out to be unsecured pieces of paper, gold, silver, platinum and palladium always have an independent value. In this sense, your investments are protected - the cost of precious metals cannot become zero even during periods of economic turmoil. On the contrary, in unstable times, their prices rise along with demand.
On the other hand, it is difficult even for analysts to predict income from precious metals. The prices are influenced by the world conjuncture of demand, and it is almost impossible to take into account all factors. The cost of precious metals fluctuates a lot literally every day. There were even periods of several years when their average annual price steadily declined. For example, from 2012 to 2015, the price of silver dropped by half and then began to rise again. But if you look in the long term, investments in precious metals are ahead of inflation, which means that your savings will really remain.
Conclusion: investing in precious metals will really help you keep your savings, but only if it is an investment for a long time - at least 10-15 years. In a short period of time, you have a chance not only not to build up, but even to lose part of your savings.
Myth 2. When precious metals become cheaper, you have to buy them with all your money, because then they will still rise in price
No and no. First, you shouldn't invest more than 10% of your investment portfolio in precious metals. Don't put all your eggs in one basket, even if they are golden or silver eggs. Secondly, you need to decide on the goal: do you want to make money quickly or keep your savings? The investment strategy depends on it.
If your goal is to get quick returns, follow the universal advice of financiers: Buy assets when prices are just starting to rise after a recession, and sell as soon as prices begin to decline. But to make money like that, you need to closely monitor the market.
But that's not all, you have to go against your psychology. After all, if after the purchase the price rises, there is instinctively a desire to fix this profit. For example, you bought a precious metal for $ 12 rubles and sold it during the growth for $ 17, and the price then increased by another $ 10.
Or, for example, after buying a bullion, the price has gone down, and you expect it to go up any time soon. Selling at a loss can be psychologically difficult. As a result, you can lose more on such mental vibrations.
At the same time, you should not buy and sell too often - after all, every time you pay a commission to the company through which you make transactions. All profits can be spent on this. Therefore, set yourself clear boundaries: how much it costs to wait to check the trend.
If you do not have experience playing in the market, it is better to invest for a long time - this way you will probably earn more. You can stick to a strategy where you will regularly invest a small part of your free money in precious metals, regardless of the price. For example, once a fortnight. In a few years, this tactic should be justified: the growth in the cost of precious metals will outstrip the inflation rate.
Myth 3. It is better to buy the most expensive metal, you can make more money on it
No not always. It all depends on your financial plans, the economic situation and the dynamics of the price of a particular metal.
You can invest in any of the four precious metals: gold, silver, platinum, or palladium. The most popular is gold. It is stored in the reserves of the central banks of all countries of the world. Historically, this is the most common form of wealth accumulation.
Silver is in second place. It is very affordable. Banks offer it both in bullion and in coins. Like gold, silver rises in price during an economic downturn, during periods of crises. From this point of view, gold and silver can be viewed as a form of savings insurance in turbulent times.
Platinum and palladium have entered circulation only in the last hundred years and have not yet received such distribution and recognition as an instrument of accumulation, as silver and gold. These metals are more used in industry, and therefore the demand and price for them increases during general economic growth.
It is even more important that the dynamics of the cost of platinum and palladium is much more influenced by production factors: the volume of production (and few companies extract them), industrial consumption, demand for cars (in the production of which these metals are used), and so on. That is, factors that are not directly related to the financial market, therefore, it is more difficult to predict them.
I want to invest in precious metals, what should I pay attention to?
Price
If you're willing to invest a little, the cheaper metal is fine.
You cannot buy a kilogram of gold for a small amount, silver is much more affordable - you can boo and take several at once. For example, on August 1, 2017, the price of 1 gram of gold was $ 40, and 1 gram of silver was $ 0.5.
Oscillation dynamics
For short-term investments, a more volatile metal may be suitable - one with the price of which fluctuates more. The value of silver, for example, changes more often and with a greater amplitude than gold. This means that you can quickly make more money on it - or lose more.
The dynamics of prices for precious metals can be viewed on the website of the Bank. Every working day, the regulator sets discount prices for precious metals, which are then used by commercial banks. The cost of buying and selling precious metals in different banks is different, as well as the buying and selling rates of currency. Compare information to find the best deals.
Liquidity
Examine how quickly and with what losses you can sell the metal. Banks set a commission for the redemption of precious metals - up to 30%. If you are not investing for several decades, it is better to invest in gold or silver. They are more liquid than platinum and palladium: they are easier to buy and sell at the best prices.
Myth 4. Only the rich can invest in precious metals - you need to buy whole bars
No, you don't have to be rich. You can invest at least one hundred rubles, at least one hundred thousand in precious metals. You can choose the option that suits you.
Buy ingot in a bank
This is how you get the pure metal.
Pros:
- Bars come in different sizes, even weighing 1 gram.
- You will receive a precious metal that will retain its value over time.
- You pay only for the metal itself, not for its processing.
Minuses:
- When buying, you need to pay an additional 20% VAT, and when you sell it, you will not be refunded.
- If you sell a bar earlier than three years after the purchase, you will have to fill out a declaration and pay income tax (PIT) on the difference between the purchase and sale prices. If you owned it for three years or more, you do not need to pay personal income tax.
- If you want to store your bullion in a safe deposit box, you will also have to pay extra for that.
- It may take some time to check the ingot. It's good if the bank does it with you. But this is not a bill that can simply be passed through the detector, so that the answer can be given the next day.
Buy investment coins from precious metals
The value of a coin is clearly tied to the value of the metal from which it is made.
Pros:
- You can choose a gold or silver coin of a suitable value - from $ 15 to several $ 1000.
- You do not need to pay VAT when buying investment coins. But when selling, you will have to pay personal income tax on the difference from buying and selling, as in the case of precious metals. If you have had the coin for more than three years, then you do not need to pay personal income tax.
- The coins are compact and easy to store at home.
Minuses:
- The Bank of Russia sets the value of the coin with a markup from 3 to 20% of the net value of the metal, and commercial banks add their commission to this.
- Commercial banks buy coins back at a discount of up to 30% of the price. Study the conditions of different banks carefully.
- You can also earn money with commemorative coins made of precious metals, which are in demand among collectors. Over time, their value can rise faster than the value of the metal itself.
Open an impersonal metal account
This is the purchase of "virtual metal", you will not get it in your hands. It's just that your account will have grams of precious metal. To open such an account, you need a passport, TIN and money that you pay for the precious metal.
Pros:
- An account can be opened for any amount and linked to any precious metal.
- No need to pay VAT.
- You can buy and sell virtual grams of precious metal to the bank in any quantity at any time and profit from price fluctuations.
- Virtual metal can be exchanged for real: close the account and get your hands on the ingot.
Minuses:
- If you take a deposit in the form of a bullion, you will need to pay 20% VAT.
- OMS does not fall under the deposit insurance system; if the bank's license is revoked, you will not receive compensation.
Anya opened a compulsory medical insurance company in one of the banks on July 1, 2013. Then 1 gram of gold cost 1,333 rubles. She paid 13 330 rubles for 10 grams of gold. Four years later, Anya decided to close the account. At the time of the sale, on June 30, 2017, the bank was ready to purchase gold at a price of 2,228 rubles per gram, that is, for 22,280 rubles. Thus, she earned 8,950 rubles. That is, the profitability of its investment is 13% per annum. But if Anya wanted to take not money, but an ingot, then the profitability would have been different. First, she would have to pay VAT (20%). And with the remaining money, she could only get 8 grams of gold.
Invest in mutual funds
Some mutual funds invest in precious metals. You will not become the owner of bullion, but you will receive shares of the fund. The value of these shares will be tied to a basket, which will contain gold, silver and other metals in certain proportions. When what metal to sell and buy is decided by the management company of the mutual fund.
Pros:
- You buy a whole portfolio of precious metals and are managed by professional investors.
- You pay income tax only when the share is repaid, there is no VAT.
Minuses:
- You cannot directly influence the policy of the mutual fund and decide when to buy or sell a particular metal.
- Investments in mutual funds do not fall under the deposit insurance system, if the mutual fund goes bankrupt, you are not guaranteed a refund.
Myth 5. Buying jewelry is also an investment in precious metals.
No, buying earrings and rings, you will never earn. Their price is 2-3 times higher than the cost of pure metal in them. And in the purchase or pawnshop they will be guided precisely by the cost of the metal. So, in the best case scenario, you can get back half or a third of your expenses, unless, of course, this is a heirloom of the royal family, for which connoisseurs of antiques are hunting.
In some countries, such as India or the United Arab Emirates, buying jewelry is tantamount to investing in gold. But there they are made of metal of a very high standard and are sold with a small mark-up - about 10%. In Russia, in most cases, both samples are lower and the mark-up is higher - you will hardly be able to profitably sell ordinary jewelry.