7 Reasons Real Estate Is A Better Investment Than Gold
- Author Jason Hartman
- Published August 25, 2010
- Word count 468
In episode 168 of the Creating Wealth Show, Jason Hartman discusses some of the disadvantages of investing in gold.
Despite the crowd of investors clamoring to join this gold rush redux, Jason is not a fan. In fact, he likens buying precious metals with investing in insurance since neither meets his standards of a true investment, although they are touted as such. If you want evidence, consider that insurance companies turn around and invest your premiums in real estate.
Few would argue that gold and silver are essentially money. Thus, precious metals are equivalent to savings or wealth stores, not investments, and they are vulnerable to the weaknesses inherent in currency. Paper money is also referred to as "fiat" currency, meaning its value is conferred by authority; that is, it is only secured by a pledge. Furthermore, Jason predicts that "Money is in for a long-term loss in value," prone to inflation and subsequent devaluation - similar to what happens with your investment in insurance.
This discussion is prompted by an addition to Jason's list of disqualifiers that make gold and precious metals a bad investment, bringing the total to 7 reasons:
-
In contrast to property investment, there is no financing, thus no leveraging to allow you to build wealth.
-
In contrast to tax deferment opportunities, there is no tax advantage.
-
In contrast to real estate rental, there is no income potential.
-
Your investment is subject to confiscation; arguments that collectible coins are immune from seizure are flawed since there is no guarantee this protection won't ever change.
-
Precious metals are prone to manipulation by those motivated to suppress their value in order to boost paper money.
-
The myth of superior gold liquidity. This argument fails on a couple counts. Proponents tout the facility of buying and selling gold, but there are hidden costs in offers of guaranteed buy-back of gold purchases. When you are ready to liquidate your investment, you'll be penalized with a 1.5% premium for melt-down value, on top of shipping & handling plus insurance expenses. Real estate actually benefits from its lack of liquidity because combined with higher transaction costs, this equates to lower volatility. In contrast, the low transaction costs and high liquidity claimed for precious metals are a perfect formula for greater volatility.
-
If gold does go up in value, the gain is nominal rather than an actual increase in buying power. This is because when gold appreciates it typically coincides with a devaluation for paper money. Moreover, those gold profits are taxable, in contrast with the "most tax-favored" status enjoyed by real estate investment. By exploiting the 1031 tax-deferred exchange it is possible to trade up tax-free with property for a lifetime. Even if the dollar depreciates, your asset appreciates with inflation and you will have locked in a long-term loan that you repay "for free".
Rate article
Article comments
There are no posted comments.
Related articles
- Port Orange -- The Perfect Twin Sister to Daytona Beach
- RE/MAX Ace Spearheads Innovative Housing Solutions in the GTA
- Should You Waive the Home Inspection Contingency? Weighing the Risks and Benefits
- Avenir: Embracing Lifestyle and Community in Palm Beach Gardens
- Serbian Real Estate: A Tidbit for Investors
- Discovering Life in Pattaya, Thailand: An In-Depth Handbook for Expatriates
- DEBUNKING HOME REPORT MYTHS
- Don't Let a Financial Hardship Force You to List Your House
- Safe Water Starts at Home
- Don’t let Missing Insulation Lead to High Energy Bills
- Property Investors Amidst Favorable Swedish Krona Rates
- How Real Estate Professionals in Houston Go Above and Beyond for Home Sellers
- Reasons to invest in real estate in Cyprus
- Top 10 criteria to select an Insurance Claim Appraiser
- Comprehensive Home Inspection Checklist for Buyer, Seller, and Homeowner
- DEBUNKING HOME REPORT MYTHS
- North Carolina Real Estate Market: Shifting Market Dynamics on the way?
- Selling Your House in Winter: Effective Tips and Strategies for Success
- Would you like to have a Free House?
- 5 Ways To Know You're Ready To Buy A Home
- "Unlocking the Potential: Investing in Dubai's Booming Real Estate Market"
- Home Decorating Tips To Make Your Home Sell FAST!
- How Home Loans Became Helpful?
- Buying A Distressed Property
- How To Identify Utah's Top 50 Real Estate Agents On Social Media
- Are You Looking To Move To Logan, Utah?
- Tips to sell your home in 2023
- Dubai Real Estate Market: An Overview
- https://www.eastpascoliving.com/active-adult-communities-in-east-pasco-florida
- Where Is Green Building Architecture Leading the Human Civilization?