With the buying power of dollars set aside for college shrinking and investment yields falling, a shortfall is likely to occur when it comes time to pay tuition, says Capital Gold Group.
College funds converted into physical gold can help keep pace with inflation and the rising cost of tuition, explains the provider of gold bullion and precious-metals IRAs.
“Parents with the foresight to move their children's college funds into gold a mere five years ago have seen the value of their holdings double in stark contrast to other traditional investments,” the company said in a press release Monday.
The last decade could more accurately be called "the lost decade" when it comes to traditional investments, the group adds.
A $1,000 investment in gold 10 years ago would be worth more than $4,000 today, while $1,000 invested in the stock market at the beginning of the decade would have had approximately the same value at the end, it said in a statement.
Metals vs. Markets
The USAA Precious Metals & Minerals Fund (USAGX), for instance, has average returns of 29.32%, 32.64% and 15.19% for the past 5, 10 and 15 years, respectively, according to Morningstar. US Global Investors Gold and Precious Metals’ (USERX) returns for the same periods are 23.65%, 27.56% and 2.13%.
In contrast, American Funds Growth Fund of American (AGTHX) had average returns of 2.53% for five years, 2.05% for 10 years and 9.28% for 15 years. The Dodge & Cox Stock Fund (DODGX) posted average returns of -0.50%, 5.70% and 9.46% returns for the same periods.
Thus, over a 10-year period the metals funds outperformed stock funds by a large margin. But that result was not as conclusive for the 15-year period.