Invest 8% Gold "Whatever the Price"
Thursday, 2/06/2014 19:32
Financial planning pro says to allocate 8% of your portfolio to gold "as insurance"...
JOHN GRAVES, a financial planner for 26 years, is a big believer in the role of gold in a diversified portfolio, writes Miguel Perez-Santalla at BullionVault.
Appearing on our New York Markets Live show, Graves explains how he believes gold should comprise 5-8% of a typical portfolio. Because "nobody can predict the future...and if there is a catastrophic event and the stock market dives gold will go through the roof.
"Gold is the ultimate portfolio insurance tool. I don't know if things will be wonderful or horrible. If things go horrible I know that gold will increase significantly in value."
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John Graves is the
founder of The Renaissance Group, independent financial planners and registered investment advisors in Ventura, CA. He is also the author of
The 7% Solution: You Can Afford a Comfortable Retirement.
Graves' 3 step rule to plan for a comfortable retirement is simple:
- Pay yourself first. Make contributions to your retirement account, get matching funds from your employer if you can. With the tax benefits of a retirement account, you're getting a 45-47% return before it's even invested, says Graves;
- Eliminate debt. Don't incur debt. If you have debt, pay it off;
- Give back to your community. There are no monetary rewards but, says Graves, giving back to the community enriches you in other ways and it is inherent in the fiber of society.
John Graves also talks about the screen he uses to identify stocks to buy. He looks for low debt-to-equity (70%), a consistent dividend yield of 5% or more, price-to-book of 1.5, average trading volume of more than 50,000 for liquidity. He places a 10% stop loss on stock trades.
Asked by an investor in California about buying gold regularly, starting with a small sum of $500 and then Dollar cost averaging monthly to build the account, we also explain how low trading fees and the benefits of physical bullion can work in a retirement account.
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