Investing in gold has been one of the most popular investments for centuries.
It has been used as currency since ancient times, and its value has remained relatively stable compared to fiat currencies.
In addition to being an investment, investing in gold can provide tax benefits.
So, here are four reasons to invest in gold.
#1. Tax Benefits
One of the biggest advantages of investing in gold is that it provides tax benefits.
For example, if you invest $10,000 in physical gold, you may qualify for a 10% federal tax deduction.
This means that you would save $1,000 in taxes.
However, if you invested the same amount in stocks, bonds, mutual funds, or any other asset class, you wouldn't receive such a tax benefit.
#2. Liquidity
Liquidity refers to the ease with which you can convert your assets into cash.
Physical gold is liquid because you can easily trade it for dollars or euros.
Stocks, bonds, and other types of investments aren't as liquid.
They often don't offer the same liquidity as physical gold.
That makes them difficult to convert into cash quickly.
#3. Safety
As mentioned above, gold is considered a safe haven investment.
When investors feel uncertain about the future, they tend to flock toward things that are perceived as safe.
Gold is seen as a safe haven because it doesn't fluctuate much in price.
Its value remains fairly steady over time.
Because of this stability, it tends to attract investors seeking safety.
#4. Investment Potential
Finally, gold offers the potential for higher returns than other investments.
Although gold prices have fallen recently, it still holds a significant advantage over other investments.
According to the World Gold Council, the average return on gold was 9.6% between 2000 and 2017.
By comparison, the S&P 500 returned 3.8%.
A study conducted by the Federal Reserve Bank of St. Louis found that holding gold instead of U.S. Treasury bills would result in a net annual return of 7.7%, versus 0.9% for Treasuries.
These results suggest that gold is a better investment than traditional savings accounts.
Conclusion
There are several reasons to invest in gold, including its ability to provide tax benefits and its potential for higher returns than traditional investments.
