Why Pick the Most Precious Metal for Your Investment Portfolio

Why Pick the Most Precious Metal for Your Investment Portfolio

There are many investment vehicles you can choose to invest your hard earned money. The worst thing you can do is put your money in the bank. Why? Savings accounts basically erode with time. Unless you are going to be putting continuous deposits into your account, your money is not going to grow compared to the rate of inflation. The reality is that inflation will always beat the interest that you are being paid by the bank (This is where investing metals into an IRA can protect you). You have to remember, not only is inflation beating you when you put your money in the bank, but you also have to pay taxes on whatever interest is paid you by the bank. It really is a losing game if you just let your money sit in the bank. This also applies to certificates of deposits, money market accounts during times when there is low inflation. Why? The interest rates for these types of investments tend to be very low when the official inflation rate is quite low. This is the reason why it is very important to pick investment ideas that appreciate at a much higher rate than the rate of inflation. For example, let us assume inflation is five percent, you need to park your money into something that pays at least six percent if you want to maintain your money's value. Thankfully, the stock market readily appreciates and appreciates over the long haul. In fact, if you select the right company, you can double or even triple your money. That is how amazing the U.S. stock market is. In fact, there are emerging markets in global stock markets where you can invest for even greater returns. The downside to all of this, of course, is that you are taking a lot of risk. Unlike putting your money in the bank, when you invest your money in stocks, if the price of the stock crashes and you sell that stock, you are stuck with that loss. That is the bottom line. Unlike investing in bonds where the government banking off those bonds pay you interest, they do not really have a promise that they will pay you anything unless they have a dividend. Even in the dividend situation, the company can always reduce their dividends.

Stocks can be quite risky. This is why it is always a good idea to diversify. When you diversify your investments, you park your money partly in a risky investment classes and in safer investment classes. The hope is that the safer investment classes will appreciate when the risky investments crash. At best you are looking to offset whatever loses on paper you suffer due to the stock market crashing to the ground. In light of these particular set of concerns, it is always a good idea to invest in the most precious metal. There are many different precious metals on the market. Everybody is familiar with silver, gold and platinum. However, there are other industrial metals like palladium which has strong industrial uses as well as benefiting from a high price due to its extreme rarity. It is a good idea to focus on the most precious metal investment you are willing to take so you can diversify your portfolio and ensure massive loses due to your stock risk taking is minimized if not avoided entirely.

How do you determine the most precious metal?

It may seem like common sense but you would be surprised as to how uncommon common sense is nowadays. People might think that it is obvious that the most precious metal is palladium or some commodity metal. You should look beyond the literal or strict meaning of the term most precious metal, instead you should focus on the practical meaning. What is the most precious metal when it comes to practical way of parking a lot of money into an investment vehicle and pulling that money out fairly quickly? This should be your definition of the most precious metal. What is the point in investing in a very expensive commodity but have a tough time getting that money out? Moreover, what is the point of investing in the most precious metal when its price is pretty much maxed out? The most precious metal, for you, should be the most precious metal you can afford that has high volatility and affordability. In other words, when defining most precious metal, you should not just focus on the price. You should also focus on your ability to invest.

For example, the most precious metal, obviously, is something that is worth five thousand dollars per ounce. The problem is this might not be the most precious metal to invest in if it is only going to appreciate fifty dollars. Maybe if there was a precious metal investment option that started out at one hundred dollars and goes up to one hundred and fifty dollars, that is the most precious metal investment you should take or buy into. Focus on upward return. It is not enough to get incremental returns, always factor in your return on investment in terms of percentages not base dollars, base dollars can lie. It may seem that you have made a lot of money with a particular investment but when you look at it at a percentage basis, you barely squeaked by. On the other end of the spectrum is that you might have invested in silver, for example, and silver is at sixty dollars per ounce and it goes up to a much higher value, this is a solid win (View our other reasons why silver is great for any portfolio). Compare this with an expensive precious metal that sells at five thousand dollars per ounce and then only goes up fifty dollars in value. In this particular case, it is smarter to invest in silver.

Focus on other pricing factors

Precious metal investment that you should take must factor in the different considerations the market conditions which help value a particular metal commodity. Precious metals are not just expensive because they are rare. There are many rare things in the world but they are not all expensive. Why? There is no market for them. There is no demand for them. Rarity can only go so far. You have to focus on factors other than just rarity like industrial uses. The more uses there are for a particular precious metal, the higher the likelihood that that is the most precious metal you should invest in. For example, gold has a lot of industrial uses. It can be used in dentistry, it can be used in jewelry, it can be used in chemical processes, it can be used in industry. Silver, the same thing. You might identify a really expensive precious metal and think that it is the most precious metal to invest in. The problem is it might not have enough industrial uses to sustain their price. The more industrial uses there is for a particular precious metal option, the higher the likelihood that its elevated prices would be sustainable not just in short term but in the long term as well.