Tuesday, October 20, 2020

Investing in gold, a haven for retirement

Normally when a person carries out his retirement is within the period of the life of the people known as the golden age. Since we are referring to the noble metal, a metal associated with wealth, the question may arise, is gold an appropriate asset to channel savings for retirement? The answer is that yes, gold is an asset that offers great attractions to contemplate as a possible destination for savings regal assets.


Gold has been considered the safe haven asset whenever there is a conflictive situation both economically and in the event of great social tragedies such as wars, the safe haven asset is not usually financial assets, but the tangible asset is gold. We have here one of the first characteristics of this type of investment, security. However, that security does not carry stability, gold, like any asset, may experience falls in its price. Gold, like any raw material, is therefore volatile, it does not respond exclusively to a permanent upward price pattern, but rather, as those of us who follow, that market can have strong fluctuations in its prices. Of course, it must be borne in mind that gold as an investment has an exemplary long-term behavior, the investment period of the investment channeling for retirement. Gold is one of the goods that best defends against inflation, with it it is almost certain that we are guaranteed inflation. We see, therefore, another of its characteristics: even when it is volatile and an investor can have losses in the short and medium term, it is not possible to lose in the long term not only the value of the investment but the purchasing power of the amount dedicated to the investment. Purchase of gold.


Long-term, safe asset for difficult times, and profitable in the long term by beating or conserving purchasing power, but what about liquidity? Gold, an asset that is highly preferred by families and savers, is tremendously liquid, buying or selling gold bars is tremendously easy and practically also immediately. There are multiple options that provide investors with firm prices to buy and sell: liquidity with a quick sale is practically guaranteed. Of course, you have to be careful with its fraction ability.


One of the most traditional mistakes is to buy a significant amount of money in a single piece, generally a bullion. This performance is at least objectionable: if tomorrow I need a small liquidity, having a very large piece or pieces I will have to sell a very high value position when what I want is only a fraction of its value. Given this event, the general advice is to invest in several pieces of different weights. In this way, when the possibility of having to sell arrives, we will be able to choose the piece and adapt the sale only to the part that we need to meet that need for liquidity.


Many will wonder that, once the gold is bought, what do we do with it, take it home with the risk that this entails or the increase that having an anti-theft policy on the bullion can entail? The solution to this problem is provided to us by the same houses, brokers, who have highly guarded and maximum security cameras and who, for an amount of money for their custody, solve the problem for us.


But there is a characteristic that gold has, its physical possession, the fact of seeing it, of touching it, of having it in our hands with the attractiveness that it has, makes people resistant to its sale. No, it is not the same to make liquidity, to sell financial assets that we do not see, that we do not touch, than to sell something physical. As my dear Galicians would say, it comes home when one has to sell a piece of gold, something tangible and physical. That impediment, or that barrier, if you prefer, makes the person very prudent and think carefully if it is really necessary to dispose of all or part of their assets in gold. This question is tremendously important, it must be borne in mind that the savings materialized in the orange metal has a clear objective: retirement. In any case and as indicated above, its sale is easy,


We already have a whole argument in favor of this investment. By the way, and to serve as a reference, gold is one of the assets preferred by German savers, those European citizens to whom our thoughts turn when we talk about pensions and standard of living in retirement. The Germans, more at this time, have increased their holdings of gold. They, like the Spanish, think in terms of maximum security, in turn they see that banks offer very low interest rates, thresholds that do not reach inflation levels and therefore drain future purchasing power.


But returning to the thread of this article, we cannot ignore the legal aspects and taxes that the purchase, sale and possession of gold entail. The purchase of gold must be declared to the Treasury or we could have problems in the future of great significance and tremendously expensive. The declaration is an administrative act of great simplicity and that on many occasions it is provided to us by the same broker with which we operate. Therefore, until now we see again the simplicity of the operation.


Of course, taxation remains. Let's go first with VAT, do I have to pay VAT for the purchase of gold? According to European regulations, the acquisition of physical investment gold is not taxed with VAT from 2 grams, as long as it has a purity greater than 99.5 percent in the case of bullion and 90 percent in the case of bullion. Of coins, in case you choose to buy these pieces instead of ingots. This absence of VAT is not general, it is only applicable to the concept of investment gold. Regarding personal income tax, the taxable event will occur when the investor sells bullion. At that time and in the return corresponding to that year, you must pay taxes. Taxation is similar to the reimbursement of shares in an investment fund: the difference between the net amount obtained from the sale and the amount paid at the time will be considered a capital gain or loss. Therefore, the result will be integrated into the savings base that which is taxed under the 19-21-23 percent scheme as the limits set by law are exceeded.


As can be seen, the scheme is very simple, the legal procedures as well, and, of course, its taxation is framed within very simple schemes. Let us remember that capital gains generated by a natural person over 65, reinvested before six months and with a maximum of 240,000 in a life annuity are exempt from tax.


There are other possible ways to invest in gold through financial notes, investment funds, whether physical or synthetic, but we will deal with this in future numbers. A warning: when a person invests in gold, he must care greatly about the entity with which he operates, his reputation must be seen, his history, ultimately the investor must find out who he is dealing with and who is going to deposit his gold. There are international houses of recognized prestige and maximum solvency, it is necessary to take extreme precautions in this regard.


Finally, many people wonder how much of their assets can or should be used for this type of investment. Normally, it is practically accepted by all that between 5 or 10 percent of the assets is appropriate, although a somewhat higher amount and with regard to retirement does not pose great problems.

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