Maintaining a successful retirement portfolio is essential for those who wish to retire in comfort. At this time, precious metals investing are experiencing record high prices. For this reason, a number of financial planners and analysts are strongly encouraging their clients to diversify their retirement portfolios through precious metals investing. Inflation has been a significant contributing factor to the rise in price of precious metals, and it is not expected to disappear any time soon.
The Metals Available
When it comes to precious metals investing, each one of the primary four metals has seen a significant increase in price. For example, within the last 5 years, the average price of gold has increased by approximately 500%. One of the primary reasons for this increase in price is the increase in demand for these metals by the manufacturing industries. Palladium is an ideal example. It is used in the manufacturing of automobiles. The demand for vehicles in China, the largest country in the world, has exceeded the available supply of palladium, making this the precious metal to watch in the immediate future.
One of the primary reasons that many financial planners are recommending the diversification of retirement portfolios through precious metals investing is due to the fact that these precious metals offer a hedge of protection against the effects of inflation. The intrinsic value of precious metals is not affected by the current state of the global economy, making these metals an ideal investment. Silver and gold have been accepted as forms of payment for centuries, because it is a form of payment that retains its value.
The strength of an individual’s retirement portfolio is not based upon the rate of return or the net asset value. The standard by which it is measured is the purchasing power of the assets that are held in within the portfolio. Inflation and deflation are two components that will affect the overall, long-term value of an individual’s retirement portfolio. The compounding principle of investment can either positively or negatively affect a portfolio. Diversification of one’s investment strategies is going to determine which way their portfolio is affected.
Over the last ten years, consumers have been able to enjoy government supported low interest rates, but at the same time, the amount of debt the government holds has continued to increase at unprecedented rates. The general consensus of financial planners and experts is that this debt to interest ratio is going to result in extraordinarily high inflation rates in the very near future.
Because of the rising amount of concern over this issue, investment strategies are being adjusted to protect against the possible effects of inflation. The key to successfully diversifying a retirement portfolio is to choose assets that have historically performed well during periods of high inflation. This is why precious metals investing have become so important. Investing in these precious metals will enhance and preserve the true purchasing power of one’s portfolio both during and after the next inflation period has passed.