“Money Man vs The Closer” plus 1 more

Posted: 21 Feb 2012 04:05 AM PST

If you’ve searched financial websites you’ve probably noticed a lot of them tout the services of professionals who specialize in “wealth management”. I don’t know about you but at the moment I’m not particularly concerned with ”wealth management”. I’m more concerned about “poverty management”. At some point I’d like to be concerned with “middle income” management. I need
financial help from a different type of professional or hero, thus the creation of “Money Man”.

Money Man is designed to bring a blue collar approach to money management, or perhaps more accurately, financial survival. He will help various families through issues faced by people trying to get by in these tough economic times. One minefield families have to face on occasion is buying a car. In the initial installment of Money Man, Money Man will come to the rescue of a family that is car shopping.

This can be a traumatic experience as the family will face such budgetary enemies as “The Closer”, “The Finance Guy” and “The Switcher”. Hopefully you’ll enjoy Money Man as he helps the Walton family. As the Waltons’ will discover the pressure exerted at a car dealership can be nearly that exerted at “Time Share Mountain”.

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The Downsides to Physically Investing in Precious Metals

Posted: 21 Feb 2012 03:55 AM PST

The recent spikes in gold prices, and prognostications of doom for the global economy, have many investors considering the benefits of turning to precious metals as an investment. Throughout human history, precious metals (notably gold and silver) have been used for exchange, and they are thought to be of objective and tangible value.

In a world where fiat currencies change in value without much reference to “backing” or the “market,” there are those that believe that true value can be found in precious metals. While there are ways to invest in precious metals through stocks and funds, there has been an interest recently in physical metals.

How Can You Invest in Physical Metals?

The most obvious way to invest in gold, silver, platinum and other precious metals is to actually get your hands on the metals. Gold and silver, especially, can be bought in coin form, in order to make it easy to transport and store. You can hoard coins, and hope they rise in value. It is also possible to buy bars, wafers and other forms of physical metals.

You can also invest in what are called “certificate” metals. Instead of receiving the physical metal physically, it is stored somewhere else for you, and you are issued a certificate that indicates how much of the metal you own. In some cases, you are merely told how much of the metal you own, while in others you actually receive a listing of the serial numbers corresponding to the bars that are considered yours. It is also possible to use GoldMoney and Bullion Vault to invest in electronic gold and other metals.

Realize, too, that there are metals ETFs that are considered “ownership” in physical metals. However, many die-hard physical metals investors are a little uncomfortable with this concept.

Downsides to Investing in Metals Physically

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The upside to physically investing in metals is that you actually have something tangible — that you can touch — to show for your investment. And, if you believe that our current monetary system is on the verge of collapse, you will have the advantage in owning something that many believe possesses intrinsic value. Even if the system doesn’t completely collapse, physical metals can act as a hedge against future inflation, and increase in value.

Realize, though, that there are downsides to investing in physical metals. As you weigh the pros and the cons of investing in precious metals, consider these drawbacks:

Costs: Whenever you purchase physical metals, whether you buy coins, or invest via certificate, you pay a premium. You will pay more than the market value for the metal. Additionally, if you don’t store it yourself, on site, you will need to pay for storage. Certificate metals usually come with regular storage fees, and you will have to pay for transport if you have it delivered to your location.
Theft: There is always the possibility of theft when you have precious metals. You run the risk if you store it on site, at your home, and you also run the risk of having the storage facility robbed. If you store your precious metals in a safety deposit box at the bank, make sure that the bank has insurance specifically meant to cover such thefts; FDIC/CDIC insurance won’t do the trick.
Accessibility: If you store your precious metals at your home, then accessibility isn’t a problem. However, if you have certificate gold stored at EverBank or some other facility, you might not be able to easily access your stash. If an economic and civil apocalypse actually happens, getting access to your physical metals might be difficult. Even if you just decide you want your metals transported to you, you will still have to wait for shipment.
Liquidity: Precious metals might not be immediately liquid. In many cases, precious metals aren’t recognized as legal tender (the state of Utah in the U.S. is an exception, and not all coins are recognized). So you have to sell them for legal tender, or come to a barter arrangement, if you decide you need to convert your physical precious metals into actual, recognize money.
Taxes: Most precious metals in physical form are taxed as collectibles. In the U.S., this means that you pay a 28% tax rate on capital gains. So, if your precious metal increases in value, and you sell it, you don’t get special tax treatment like you would with long-term capital gains — no matter how long you had the metal in your possession. (The exception to this rule is jewelry, which isn’t taxed at all, since it is considered heirloom.)

Bottom Line

Adding some physical metals to your portfolio might not be a bad thing. It adds diversity and a measure of security to your holdings. However, you do need to carefully weigh the pros and cons associated with investing in physical metals.

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