Howdy fellow stackers Thought I would seek some views, again no right or wrong just some ideas. My son has been stacking for a while and has a kilo or so put away, he has started a new job with a steady income so I encouraged him from day one to start putting 10% away. He has done this and now has about a $1k to invest. He is also after a car in the next few months so will possibly draw on some of this or all. I thought as he has $1k put aside and will add fortnightly to get into PMGLD via Comsec or something like this. While not big numbers this hopefully would work harder than just the usual 6% bank interest, I suppose the next 3-6 months could be very interesting. We could also look at some small minors as a real roll of the dice but not sure this is a good habit to start teaching ? May get a little like gambling not sure. Depending on costs he can possibly trade a few times I don't know. The cost of trade 'v' return on small amounts probably would not be worth it. Or would you just seek cheap bullion as and when available ? Finally look at some numis items at good prices and flip etc... There is of course a longer motive and all of the above play a part, it is just the short term and making a few extra dollars so he can get a small reliable car ? Cheers
If it was my son in the same situation I would recommend to him to continue adding to his 6% bank account until he has enough for the car he wants; this is a simple and sound savings plan. Then I would make a plan to purchase 1oz silver coins every month using dollar cost averaging. I don't know what PMGLD is but personally I would steer clear of any "paper" gold/silver assests - look what happened to Gerald Celente. I would also avoid any speculative investments, I wouldn't buy into anything I didn't understand. I don't know much about numismatics but I don't see that as a great investment in uncertain times. Clarify your goals, understand what you're buying, formulate a plan and stick to it! Disclaimer: I am not a financial adviser. If you can't hold it - you don't own it!
I am with reggie - if he is saving for a car with a view to drawing in a matter of months, I would use the bank account. There are a lot of experts expecting PM prices to fall in the short term. If this happened and his car was pushed further away, it could make him wary of anything PM for a long long time. However, for a long term investment plan, PMGOLD is IMO the best option for any excess you don't feel comfortable keeping at home. I have PMGOLD in my SMSF for anything that didn't fit in my undies drawer. People may slate PMGOLD has paper gold with the line that "if you don't hold it, you don't own it." However, some of these same people are quite happy to use other forms of secure storage. IMO PMGOLD is safer than stashing physical in a bank safety deposit box - which to me is "you don't hold it either, and no one knows what's there, including insurance companies, the bank itself...etc, leaving you with no recourse. PMGOLD can be called upon for physical at any time, is very liquid, comes with cheap storage fees, is on the inventory for records sake, and is stored (supposedly) at the Perth Mint rather than a commercial bank or third party secure(??eg. Kennards??) storage facility. However, it is more fun to hold some physical - paper investments can become very boring very quickly for younger guys.
I think given the car purchase will happen in the short terms better to keep it as cash because gold could correct temporarily. PMGOLD would be best for accumulating gold with dollar cost averaging, but you also can't beat just accumulating cash and then buying a 1oz coin for cash from your local dealer. PS, PMGOLD is just a securitised version of the Mint's unallocated gold.
Thanks for the input. I do agree about keeping a set goal. This is very important. So keeping a straight savings goal makes sense. Which will continue. I do like the liquidity of PMGOLD also for a young guy he doesn't have the security issues associated with physical. I know the old "don't hold it don't own it" argument and I am quite sure at some point in time this will ring very true. I just don't see it yet ? So until a few more alarm bells go off I am ok with a mix of both.
After buying a car but before investing into PMGOLD, perhaps you could help your son purchase a 1/2 ounce or 1 oz gold coin. It is a tangible reward for the work he is doing and it may make him better understand and appreciate his paper investment in PMGOLD. I would also try and get him to save more than 10% of his earnings if possible.
The car will be a complete money pit so that might eat into any savings and investments. At least with physical its a little bit harder to sell than just clicking the sell button on your favorate trading platform. Also one thing to consider with investing in PMGOLD is the brokerage cost. Its the sort of thing where it would probably be better to accumilate cash then buy in bulk since it will cost $10 - $20 brokerage. This will eat into the margin. Make sure you take a read of the PMGOLD pds. There are clauses which allow for changes in fees (notice is given though). Overall it seems probably one of the "better" paper silver options available.
You could try goldstackers unallocated or something similar. He could put his money into that, and then when the time comes just cash out, or if he decides to go physical he can easily get it sent to him or something. Though i guess he could lose a bit of money if silver or gold went down before he wanted to buy his car.
If you were to be adding small regular dollar amounts to an accumulating "stack" my personal view is that this is one of the better methods i know of. saves alot on fees and transaction costs for regular transactions. Read the goldstackers unallocated description on their website for a good idea of what they offer.. Short term he needs cash savings for unexpected items then savings for rego ins. repairs. then maybe savings towards the above... Most of all he needs GOALS so he has a reason to do all the above instead of drinking it all chasing girls.. Aint kids fun..
Too many here to quote, but I certainly appreciate the comments. I will send him the link to show him so he can make his own decisions. With a little guidance perhaps I do like the Goldstackers idea or I think it is is the mini allocated that he can purchase over a few months and then get sent in one order. I will let him read up a bit more on both of those. As to if this is a shorter or longer option who knows. Once again I appreciate all of your good ideas and I would imagine them to be very helpful for some of the other young stackers about on here as well
I'm <20 and probably in a similar situation as your son. I have only had my licence for under a year and have considered buying a car a few times however I have held off for now, im just persisting with public transport, where I live its fine for getting to uni or the city. I have many friends who only work a few hours a week, most of this goes towards car costs. For me personally I don't want a depreciating assest which requires expense maintenance, fuel and insurance. I'll start looking again if I get a job which has a requirement for a car. As for investments I have just gone mainly with physical for the moment with a mix between bars and bullion coins. I'm keeping a bit of cash handy just incase.
Thanks Rick, like you my son utilizes public transport and I see no reason why this wouldn't continue. I do understand a car is freedom, well it was to me It certainly will not be on credit nor will it be a huge dollar value. Something safe, small and reliable and he is cool with that also.
