INVESTMENT NEWS & TRENDS

Investors Cautioned on "New Gold Rush"

There are lots of reasons investors are joining the new gold rush. Stocks and other traditional investments are getting hammered. Gold was already up 11% to $927.10 an ounce and has jumped as much as 46% since the end of 2006.

The dollar has continued to weaken and, as recession looms in the U.S., markets all over the world are volatile. It seems like everyone is seeking an investment that is relatively safe and gold shows promise of bouncing over the $1,000 an ounce level. Moreover, advisors are generally warning investors that in these turbulent times, a diversified portfolio can best withstand this unsettled environment.

According to Morningstar, investors last year funneled $6.1 billion into precious-metals mutual funds and exchange-traded funds (ETFs). What's more, investing in gold is not as complicated as it once was. Investors are turning to ETFs like streetTracks Gold Shares and others.

But don't be blinded by the all that shine, warns the Wall Street Journal. It points out that while gold is supposedly a hedge again inflation, it hasn't always behaved as many have predicted.

Plus, be wary of the tax consequences. "While the streetTracks Gold and iShares Comex Gold ETFs are popular among investors seeking easy exposure to gold, the Internal Revenue Service treats them like collectibles, taxing long-term gains at maximum rate of 28%, notes WSJ in an Jan. 29th article, "How to Survive the new Gold Rush." That compares unfavorably with the maximum 15% rate on long-term capital gains securities and qualified dividends."

Among the other reasons to be cautious: ongoing trend toward a weakening dollar may have peaked. Gold will be hurt if the dollar rebounds. Besides, warn some advisors, gold and other precious metals may be too high priced now to qualify as a "safe haven."

Still there remain many reasons to be in gold, chief among them is wealth preservation. "No other form of money has stored wealth so successfully for such a long period of time," says Emanuel Balarie, commodities expert. If you are concerned with maintaining your wealth for generations, gold will likely provide you with the most reliable way of accomplishing this."

Wealthy Business Owners Not Likely to Retire Early

Affluent individuals who own businesses are more likely to keep working until age 70 than other wealthy individuals who do not own businesses. That is one of the findings of a new survey of wealthy business owners by PNC Wealth Management.

The study found that these owners are more than twice as likely to work no matter how much wealth they accumulate.

The majority indicated they would continue working because, "I enjoy working and don't want to stop." Others said they continue because "work is a big part of who I am," while a minority said they continue to work "to maintain my current standard of living in my retirement" or to avoid being bored.

Not surprisingly, almost 60% of affluent business owners agree that "owning a business is the best way to amass wealth" compared to only 23% of affluent non-business owners. Of those owners in partnerships, over half are in business solely with family. Almost 40% have only non-family members as partners.

Among those business owners with family in the business, 58% work with a spouse and 15% give their children some role.

Succession Planning a Problem

Surprisingly, only a third of affluent business owners have written succession plans to help guide the transition of the business to other family members or business associates.

"Business owners who have put a lifetime into their work often have a mindset that 'no one can run this business better than I can,'" according to Jonathan Lander, J.D., L.L.M., senior wealth planner and vice president at PNC Wealth Management. They view their businesses as an extension of themselves and can't conceive of anyone else being in charge, adds Lander.