How Much of Your Wealth Should You Invest in Precious Metals?
Precious metals are a great addition to your overall wealth. As their value rises over time, so does your wealth. In most cases, precious metals can also act as an inflation hedge and protect you from the devaluation of money.
But the question remains as to how much of your money you should spend on precious metals. The number usually varies from 2–5% but can also go up to 10%. There are a number of factors that go into making this decision. If you want to know more, keep reading.
1. Your Current Investments
If you have already invested a large proportion of your wealth into the stock market, then we’d suggest investing about 5–8% of your wealth in precious metals. This is because if the stock market fluctuates or if inflation rises, you are likely to face heavy losses. If you invest in precious metals, they could save you in times of economic uncertainty, and provide an option to fall back on.
2. Your Financial Needs
Another important consideration is your financial needs. If you wish to invest in precious metals for financial security toward your retirement or later on in life, we’d suggest investing about 5% of your wealth.
However, if you’re looking for more rapid returns on your investment, we’d suggest investing much less or not at all. Precious metals do give amazing returns, but these returns take many years to accumulate into the kind of wealth you want. If you’re in need of wealth, we’d advise against the investment entirely.
3. The Situation of the Economy
Historically, gold is known to increase in value when the economy goes into recession and when inflation is on the rise. If you see the economy in a boom period, headed toward a recession, then this may be the best time to invest, because as the value of money falls, the prices of gold will rise rapidly.
When you see inflation creeping up, invest the whole 5% on gold and you will likely see great returns. However, if the economy is in a growth period, you should invest less of your money in precious metals.
If you’re looking to invest in a precious metal IRA account, Orion Metal Exchange offers the best in gold and silver bullion as well as private vault storage. Head over to our FAQ page to learn more about precious metals.