Investing In Gold – Is The Price Right?

Rachel writes in with the following question about investing in gold:

I enjoy reading your blog about wise spending. I have a question and I’m not sure who to go to. My husband is interested in investing in gold. What are your thoughts on investing in this direction? Do you have other sources that you lean on for investing advice?

Gold Coins

Photo by Muffet

Rachel, your question comes at a good time. I spend a lot of my day listening to a variety of talk radio programs at work on subjects that range from sports to politics to personal finance. All three tend to run a lot of advertisements for investing in gold. While intrigued, I confess to not knowing much about investing in commodities, so to answer your question I decided to dig into some research while asking the Frugal Dad community for help with your question.

Why Invest in Gold?

A recent check of gold prices shows it is hovering around $1,000 an ounce. It seems like every week or so gold prices set another record. But in the world of economics, it is usually true that what goes up, must come down. That’s not always the case, but I wonder if gold prices will work the same way.

As the market moves ever-so-slowly towards recovery, will gold prices remain high? Who knows? Conventional investing wisdom says gold is a safe bet when times are tough (inflation, weakening dollar, etc.). We’ve certainly had tough times, but to this point it seems inflation has been kept in check. I’m not completely sold on the idea our government will be able to control devaluation of the dollar as more and more money is pumped into the system.

So the real question is, “Is now the right time to invest in gold, or would investors be getting in at the top only to see their investments disappear in a recovery?” I think the answer to this question is the same answer I give to others interested in any form of investing:  Invest for the long term, don’t try to time the market, and diversify.

If you’d like to pick up a few gold coins, or bullion, as a percentage of a broader long-term investment portfolio, that seems reasonable. If you dump your entire nest egg in gold, betting on the continuation of tough times, well, that just sounds too risky for my liking.

Ask the Readers: OK readers, I know there are plenty of you out there smarter than me on the subject of investing in gold. What more can you tell Rachel about gold investments? Is it better to invest in physical gold, mutual funds, etc? What are your thoughts on the timing of making new purchases of gold? Feel free to make any specific brokerage recommendations you may be familiar with as well.

3 Easy Steps To Dump Your Resentments – And The Money You’ll Save When You Do

The following guest post is from Neal Frankle of Wealth Pilgrim. Wealth Pilgrim is on my short list of daily reads. After reading the post, head over to Neal’s site and sign up to receive his posts.

Is there something that really makes you angry?  I mean, something or someone who completely steams your tea?

If so, consider yourself lucky.  You have an amazing opportunity.

I know this might sound crazy but (at least, in my case) an old resentment turned into a huge opportunity and one I never saw coming.

Before I go into the details, I have to give you some background.

When I was in college, I played snare drum in the school marching band.  Even though the drum weighed heavy on my shoulder and the drills took hours and hours of practice in the scorching sun, there were perks.

After all, who says “no” to dressing up like a complete moron and marching around in front of 30,000 people on Friday night?  Those other poor fellows who were busy guzzling beer at the fraternity house didn’t know what they were missing…..poor saps.

As thrilling as the marching band was, I started getting ticked off soon after football season began.  I was angry that the team got all the glory.  What did the lowly drummer boy get?  Nada.

As each game passed, I become more and more irritated.

The players got first-class treatment all the time.  They traveled to exotic places like Hawaii.  I went to Barstow.

They got their own special meals.  I ate Frosted Flakes.

They got special parking spots for their cool rides.  I bought a 10-speed.

And do I need to mention who met all the women?  Here’s a hint…..it wasn’t me.

I suffered through the football season and basketball season.  Then, I hung up my marching band uniform for good.

But while I turned in my sticks, I held on to my resentments.

As a matter of fact, I didn’t attend another college football game for 30 years.

That all changed last weekend and this is where I discovered a great opening.

For a variety of reasons, I found myself sitting in the old stadium watching my alma mater kick the tar out of New Mexico State.  I enjoyed it.

Oh….I’m not talking about the game.  I could have cared less about that. What I really loved seeing was the marching band again. There they were. The uniform design was exactly the same as it had been 30 years ago.

But I noticed something very strange.

Those uniforms looked beautiful to me.

These kids didn’t look dumb in their uniforms at all.  They were cool.  And they were having a great time – probably more fun than the players.  The band was rocking out, jumping around, laughing.

This was far different from what the players were going through.  Even though my team was winning, I could hear the crack of one helmet on another just like the sound my teeth used to make on those oh-so crunchy Frosted Flakes of yesterday.  Yikers.  That had to hurt.

Exactly at that moment, my resentments disappeared.   I realized how fortunate I was to have been in the marching band.

I remembered that I did have good times a plenty while I was marching around out there in the hot sun.  I made good friends and I got to play music.  Another bonus was that there weren’t any 300 pound gorillas chasing after me trying to turn me into a pancake.  And from a practical standpoint, I was able to graduate college in 4 years because of my participation in the band.

Besides all that, nobody forced me to play.  I could have quit anytime I wanted to.

Yes, I had a lot to be grateful for.  I never had any reason to resent anything about it.

Why didn’t I see this while I was in school?

What an opportunity I missed.  Rather than enjoy more of my time in the band, I resented the players for having the perks they got.  What a shame. What a waste.

I was a bit ashamed of myself.

What did my resentment cost me?

I wasted precious time in anger.  It cost me a lot of life.

As hard as I try, I can’t think of any way this rotten behavior cost me financially.  Yet it’s still relevant to you as a personal finance enthusiast.

Why?

Because, if you are like me…you aren’t after more money for money’s sake.  My guess is that you want to improve your financial life because you want to have…well….more life.

My guess is that you want more freedom and happiness.  That’s why money is interesting and important to you.

Well….what I’m talking about is a way for you to have that and it won’t cost you a penny. You don’t have to buy any books or tapes.  You won’t have to go to any weekend seminars either.  So what do you have to do?

It’s simple.  You have to get rid of your resentments.

While this may seem like a tall order, I think there are a few tools you can use to make this a simple task:

1. Write down all the things you resent.  What really ticks you off?
Your boss?
Your husband?  Kids?  In-Laws?
The Government?
That you don’t live in Malibu?
That the Beatles broke up 40 years ago?  What is it that boils your oil?  Write it down.

Now, as terrible as these things are, consider for a moment if there weren’t any silver linings in those dark clouds. Have any of the things you resent so much really been a blessing in disguise?  For example, let’s say you lost a great job several years ago because your boss, Eric Slick, was dishonest and blamed his mistakes on you.

Did anything good come out of it?  Did you find a better job?  Did you meet some great people?  Do you have a better working situation now?  Surely something good came out of it.  If you can’t come up with something, pretend you are interviewing a friend who went through what you did.  What silver lining would you point out to you friend?

2. Write it all down. It won’t do you much good if you only have this conversation in your head.  I’ve found that writing has some magical connection that allows me to really get value from these kinds of exercises.

3.  Write a thank you letter to the person, place or thing expressing gratitude for the new gifts you reaped. Don’t worry, you’re not going to mail this letter – ever.  It’s just a way for you to really bring the message home – to yourself.

This exercise helped me so much.  Living with anger is such a damn waste.  It’s a terrible way to live.  Have you held on to resentments too long?  Did it have a financial cost? What other ways did it cost you?  How did you finally overcome those old resentments?  How did it change your life?

Weekly Roundup: Become a Frugal Dad Fan Edition

I have finally taken the Facebook plunge! I created a personal account some time ago to reconnect with friends, but just this week I set up a fan page for FrugalDad.com. My goal for the fan page is to provide a place for readers to interact with me outside of the comments section, Twitter, etc. I enjoy chatting in those environments as well, but let’s face it – having a discussion is tough to do in 140 characters, or through the back-and-forth nature of blog comments.

Yesterday I tossed out a “Discussion” feature and a few questions to get things going. Since I removed the forums feature here at Frugal Dad, I’m hoping this can replace some of those features. Because many of the discussion topics are seeds for future posts, your feedback is greatly appreciated. Who knows, I might just mention one of your comments in the post and reference your blog.

Hope you’ll join me over at the new Frugal Dad fan page at Facebook! Click the banner below to join, and be sure to check out the roundup below.

fbFan

The Frugal Roundup

Want to Get Out of Debt? Become A Master at Instant Gratification. Sounds counter-intuitive, doesn’t it?  Read on to find out what Neal means about mastering instant gratification and using it to your advantage. (@Wealth Pilgrim)

Do You Need a Local Bank? We are fans of ING Direct, but also maintain a local checking and savings account. We keep a local emergency fund (the first couple thousand of our fully funded emergency fund) here just in case we need cash in a hurry. (@My Dollar Plan)

Finally Out of Debt? Here’s How to Stay Out. So many people fight for years to obtain debt freedom, only to fall right back in the trap of living beyond their means. (@Wisdom Journal)

Google Street View – Great For House Buyers. We have been entertaining the idea of relocating here lately and have found Google Street View to scope out a number of properties in other cities. (@Four Pillars)

Sneaky Ways Restaurants Use Menus to Entice You to Spend More. I’ve read a number of articles on the ways grocery stores use consumer psychology to make shoppers spend more. This is an interesting piece on similar strategies employed by restaurants. (@Wallet Pop)

Why Freelancing Benefits Your Day Job. Those who have read FD for a while now know I’m a big proponent of the “side hustle,” for exactly the reasons pointed out in this post. (@Fiscal Fizzle)

The “Local Store Premium” – How Much Is It Worth to You? This weekend I worked on a couple major household repair projects. Rather than going to the big box warehouse store, I decided to try our local hardware store for supplies. I paid a little more, and they had less product options, but I felt good about helping a local store this time around. (@The Simple Dollar)

Best of the Rest

Hope everyone has a great end of the week. Just a heads up – only 10 weeks until Christmas. Don’t wait for the last minute and charge presents on a credit card. Start saving now and enjoy a cash-only Christmas!

Online Halloween Costume Bargains

The following guest post is from Aaron, a Frugal Dad reader who wanted to share his experience with a discount costume website.

I have always been a conscientious shopper. I never leave the house without my coupon folder, always use my club card and always comparison shop before I purchase. That’s why I’m a huge fan of shopping online. Bargain hunting and price comparison is quick and easy. So naturally I planned to purchase our Halloween costumes online this year.

This year, we have a costume party to attend and I thought it would be fun to dress in theme costumes like superhero or Disney characters. We weighed the options and finally settled on The Incredibles because they worked so well as a family costume.

I love the ease and convenience of online shopping and I know I had many online Halloween costume stores to peruse.  My goal was to find the costumes at the lowest price. I Googled “cheap costumes” and saw an ad for www.costumediscounters.com that offered “Guaranteed Lowest Prices Plus Free Shipping.” That had my name all over it.  I place my order and a week later I had my 3 costumes: Mr. Incredible, Mrs. Incredible Child Costume and….Another child costume? Where was my adult Mrs. Incredible costume? Apparently they made a mistake and sent two girl’s costumes instead of one girl’s costume and one women’s costume.

The only thing that makes shopping online a nuisance and expense is if you have to return something. But, when I called the customer service number for Costume Discounters, the exchange turned out to be easy, pleasant and best of all – FREE. I explained the problem. They were very apologetic and quick to act. They processed an order for the correct costume and I was directed to an online exchange site that allowed me to print a return UPS shipping label right from my own printer. The customer service rep walked me through the whole thing which only took a few minutes. I brought the package to my office the next day and dropped it in the UPS drop box in the parking lot and that was that. I didn’t cost anything extra, took almost no time and I had my costume in the correct size a few days later.

Nothing beats shopping online for bargains except maybe buying from a company that has low prices, great service and free exchanges. It couldn’t get any easier or inexpensive as it did with Costume Discounters.com

Note from Frugal Dad: For fun, feel free to share what you (or the kids) will be dressed up as this Halloween. Are you planning a homemade Halloween costume, or will you give an online discounter a try? Or, if you don’t recognize Halloween, what are your plans? We’ll be attending our kids’ school Fall Festival.

Successful Investing-Not Magic

This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.

The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors.  Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.

How to Become a Successful Investor?

There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried.  First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.

How to Simplify Your Investment Portfolio?

1.  First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.

2.  Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.

3.  Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.

4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.

5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.

Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.

How do you feel about your investment portfolio? Do you find it confusing? Have you simplified your investment portfolio? Any tips you’d like to share?