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Why you should invest in gold this January
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When it comes to your investments, timing is everything. You don’t want to get in too late and miss out on the benefits of a particular asset. But you don’t want to get involved too early, either, and have your money locked away in an asset that underperforms for your portfolio. The timing needs to be just right to avoid either scenario.
In 2023, the timing for investing in gold was right for many people. Investing in the precious metal hit an 11-year high in September. With high inflation and elevated interest rates, it made sense for many to invest in gold, if only to help protect their portfolio as other assets underperformed.
That said, a new year provides a new time to reflect and recalibrate, leading many to wonder if they should still invest in gold this year. There are compelling reasons to get still involved, especially this month. Below, we’ll detail three reasons why you should invest in gold this January.
Start by reviewing your gold investing options here to learn more.
Why you should invest in gold this January
Here are three reasons why investors should consider gold this month.
Inflation is still a concern
Inflation seemed to be heading on a preferred, lower trajectory in recent months but progress may have stalled. Inflation rose in December and currently sits at 3.4% — that’s 1.4% above the Federal Reserve’s target 2% goal. While it’s too early to tell if that report was an anomaly or a sign of future economic concerns, it wasn’t the number economists were hoping for.
Against this backdrop, then, a gold investment this month can still be valuable. Known for its ability to hedge against inflation and maintain its value during inflationary periods, many may want to turn to gold now as the battle to rein in inflation continues into 2024.
Get started with a gold investment online today.
The price could tick up higher
The price of gold today is $2,021.70 per ounce. That’s slightly below a record high, reflecting the high demand and interest in the precious metal. But if inflation doesn’t come down or if turmoil increases — both overseas and in the United States during this election year — the demand could tick up even further and the price will inevitably rise with it.
While gold isn’t the income-generating investment other assets are, it’s still always better to buy lower and sell higher. January 2024, then, could be a great time to do just that.
It can diversify your portfolio
Take a closer look at your investments to see where your money is tied up. Chances are high that you could use some diversification in case assets like stocks, bonds and real estate take a hit in 2024. With so many factors at play — from global unrest to inflation and high interest rates at home — there’s no telling what will happen to your conventional investments.
Gold, however, tends to remain steady in the face of these developments and can help diversify your portfolio by keeping it afloat when other assets falter. While it’s true that this is a valuable benefit at any time, it can be especially helpful now in light of the above considerations.
The bottom line
Gold can be a valuable investment at any time, as investors over the last few centuries can attest. But, like any other investment, there may be better times to get started than others. For many, January 2024 could be one of those times. Due to a (still) ongoing battle against inflation — and the help it can provide in that fight — gold could be worth investing in now. Plus, the price is high with the potential to rise even higher this year (giving you a possible quick win, too). And it can still serve as the traditional portfolio diversifier it always has, which can be particularly important considering the economic headwinds coming toward investors this year.
For all of these reasons, this January could be a great time to invest in gold. Start researching your options online today.
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Certificates of deposit (CDs) have long been a favored savings tool for those seeking safety and predictability in their investments. These interest-bearing accounts have been even more popular in recent years though as the high-rate environment offered savers an enticing opportunity to earn big interest on the money they deposited. But the economic environment is shifting now that inflation is cooling and the Federal Reserve has slashed its benchmark rate twice in response, which has led CD rates to experience a decline.
Even with this downward trend, though, CDs continue to offer compelling returns compared to historical averages, particularly when measured against the near-zero rates that characterized much of the previous decade. For perspective, it’s still easy to find CD rates above 4% right now, but savers were fortunate to find CD rates above 1% as recently as 2021, making today’s rates notably attractive even after recent declines. When you factor in the other benefits of investing in a CD, like getting a fixed, locked rate for the entire term, it makes sense to consider investing in CDs as part of your broader investment strategy.
Still, this evolving rate environment presents both challenges and opportunities for strategic savers, leading to some hesitation for those considering locking their funds into one of these accounts. But while the natural instinct might be to shy away from CDs as rates decline, it’s important to understand how far CD rates have actually fallen this year — as well as the enduring benefits of these financial instruments.
See how much more you could be earning with a CD now.
Here’s how far CD rates have dropped this year
To illustrate the change in CD rates that has occurred so far in 2024, let’s look at the average CD rates from January 2 as well as today’s averages (according to Bankrate data).
6-month CD rates
- Average 6-month CD rate on January 2: 5.50%
- Average 6-month CD rate today: 4.85%
Total percentage drop: 11.81%
1-year CD rates
- Average 1-year CD rate on January 2: 5.66%
- Average 1-year CD rate today: 4.50%
Total percentage drop: 20.49%
3-year CD rates
- Average 3-year CD rate on January 2: 4.75%
- Average 3-year CD rate today: 4.20%
Total percentage drop: 11.57%
5-year CD rates
- Average 3-year CD rate on January 2: 4.60%
- Average 3-year CD rate today: 4.35%
Total percentage drop: 5.43%
As illustrated above, the decline in CD rates has varied by term, with 1-year CDs seeing the most significant drop. These shifts can largely be attributed to the broader economic adjustments, such as market responses to Federal Reserve interest rate policies. Lower rates often indicate a cautious market, signaling that economic growth may be slowing or that inflationary pressures are easing, both factors that banks consider when setting CD rates. Still, even with these adjustments, CDs offer some of the most attractive yields for secure savings accounts.
Open a CD and lock in today’s top rates now.
Why you should still open a CD now
CDs are still an excellent option for conservative investors or anyone looking to secure a stable return without market exposure, even at today’s lower rates. Here’s why:
- Guaranteed returns and safety: CDs provide a fixed, guaranteed return on investment, regardless of market fluctuations or future rate cuts. This stability is particularly appealing during uncertain economic times when other investments may present more volatility. For many, this peace of mind alone makes a CD worthwhile, especially when saving for short- to medium-term goals.
- Higher yields compared to savings accounts: Even with this year’s rate drops, CD rates remain higher than most standard savings or money market accounts. For example, a 1-year CD today offers an average rate of 4.50%, while the average savings account rate is currently just 0.45%. This spread can make CDs a better choice for funds you don’t plan to access for the term length, giving your money a chance to grow at a higher rate.
- Predictability for financial planning: With CDs, you know exactly what your return will be at the end of the term. This predictability helps with budgeting and financial planning, making CDs ideal for earmarked funds such as emergency savings, future down payments or anticipated large expenses.
- Potential tax benefits on longer terms: The potential tax advantages can also help enhance overall returns on longer-term CDs. While CDs are subject to income tax, tax-advantaged accounts like IRAs often allow CDs to grow tax-free until withdrawal. This option can be particularly appealing for long-term savers, as it lets returns accumulate more efficiently, effectively offsetting some of the recent rate drops.
The bottom line
While this year has seen a decline in CD rates across all terms, the value proposition of CDs remains strong, especially for those prioritizing safety, fixed returns and ease of financial planning. Even with the rate reductions, CDs can offer higher yields than regular savings accounts and the security of knowing your investment is FDIC-insured up to the standard limit. As the economic landscape continues to evolve, it’s worth considering the potential for future rate shifts, but locking in a CD today can still provide benefits for savers seeking reliable, stable returns on their cash.
