Record Low Exchange Rate
On December 19, the official exchange rate of the Nigerian currency, the naira, reached a record low of 1,248 naira for every US dollar. However, it managed to recover slightly and closed the day at 845 naira per greenback. This depreciation almost matched the rates offered on the parallel market for naira-to-dollar exchange, according to a Reuters report.
Abandoning the Fixed Exchange Rate Regime
After assuming office in late May, Nigerian President Bola Ahmed Tinubu made the decision to abandon the fixed exchange rate regime. This move resulted in an initial 30% plunge in the naira-to-dollar exchange rate, from N470:US$1 to N634:US$1. Subsequently, the Central Bank of Nigeria (CBN) allowed the naira to freely float, leading to further depreciation.
Continued Depreciation on the Unofficial Market
Despite these changes, the naira has continued to lose value against the US dollar on the unofficial market. By December 20, one dollar was equivalent to 1,228 naira. Some experts attribute this ongoing depreciation to Nigeria's inability to generate enough foreign exchange to support its currency.
Cautious Optimism for 2024
During a recent appearance before the Nigerian Senate and House of Representatives Joint Committee, CBN Governor Olayemi Cardoso expressed optimism about the future of the naira. He predicted a positive outlook for the domestic economy in 2024, with expectations of a decline in inflation pressures and a significant reduction in exchange rate pressures as the foreign exchange market functions smoothly.
It remains to be seen whether the naira will recover from its current lows, but the Central Bank of Nigeria is hopeful that stability will be achieved in the coming years.
What are your thoughts on this situation? Let us know in the comments section below.
Frequently Asked Questions
What is the tax on gold in an IRA
The fair market price of gold when it is sold determines the tax due on its sale. You don't have tax to pay when you buy or sell gold. It's not considered income. If you decide to sell it later, there will be a taxable gain if its price rises.
Gold can be used as collateral for loans. Lenders seek to get the best return when you borrow against your assets. This often means selling gold. This is not always possible. They may hold on to it. They might decide that they want to resell it. You lose potential profits in either case.
You should not lend against your gold if it is intended to be used as collateral. It is better to leave it alone.
How much should your IRA include precious metals
When investing in precious metals, the most important thing to know is that they aren't just for wealthy people. They don't require you to be wealthy to invest in them. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. Stocks in companies that produce precious materials could be purchased. You might also want to use an IRA rollover program offered through your retirement plan provider.
You'll still get the benefit of precious metals no matter which country you live in. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
And, unlike traditional investments, their prices tend to rise over time. If you decide to make a sale of your investment in the future, you will likely realize more profit than with traditional investments.
Is buying gold a good option for retirement planning?
Buying gold as an investment may not seem very appealing at first glance, but when you consider how much people spend on average on gold per year worldwide, it becomes worth considering.
Physical bullion is the most popular method of investing in gold. However, there are many other ways to invest in gold. You should research all options thoroughly before making a decision on which option you prefer.
For example, purchasing shares of companies that extract gold or mining equipment might be a better option if you aren't looking for a safe place to store your wealth. If you need cash flow to finance your investment, then gold stocks could be a good option.
ETFs allow you to invest in exchange-traded funds. These funds give you exposure, but not actual gold, by investing in gold-related securities. These ETFs can include stocks of precious metals refiners and gold miners.
What is the Performance of Gold as an Investment?
The supply and demand for gold affect the price of gold. It is also affected negatively by interest rates.
Due to their limited supply, gold prices fluctuate. In addition, there is a risk associated with owning physical gold because you have to store it somewhere.
How much is gold taxed under a Roth IRA
Investment accounts are subject to tax based only on their current value and not the amount you originally paid. Any gains made by you after investing $1,000 in a stock or mutual fund are subject to tax.
But if you put the money into a traditional IRA or 401(k), there's no tax when you withdraw the money. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
Each state has its own rules regarding these accounts. Maryland is an example of this. You must withdraw your funds within 60 calendar days of turning 59 1/2. You can delay until April 1st in Massachusetts. New York offers a waiting period of up to 70 1/2 years. To avoid penalty fees, it is important to plan and take distributions in time to pay all your retirement savings.
Who holds the gold in a gold IRA?
The IRS considers an individual who owns gold as holding “a form of money” subject to taxation.
You must have at least $10,000 in gold and keep it for at most five years to qualify for this tax-free status.
The purchase of gold can protect you from inflation and price volatility. But it's not smart to hold it if your only intention is to use it.
You will need to declare the value of gold if you intend on selling it one day. This could impact how capital gains taxes you owe for cash investments.
To find out what options you have, consult an accountant or financial planner.
Statistics
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
External Links
finance.yahoo.com
law.cornell.edu
- 7 U.S. Code SS7 – Designation board of trade as contract marketplaces
- 26 U.S. Code SS 408 – Individual retirement plans
forbes.com
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
bbb.org
How To
3 Ways to Invest in Gold for Retirement
It is crucial to understand how you can incorporate gold into your retirement plans. There are several options to invest in precious metals if your employer has a 401k. You might also be interested to invest in gold outside the workplace. A custodial account can be opened by a brokerage firm like Fidelity Investments if you already have an IRA. Or, if you don't already own any precious metals, you may want to consider buying them directly from a reputable dealer.
If you do invest in gold, follow these three simple rules:
- You can buy gold with your cash – No need to use credit cards or borrow money for investment financing. Instead, invest in cash. This will protect your against inflation and increase your purchasing power.
- Physical Gold Coins to Own – Physical gold coin ownership is better than having a paper certificate. Physical gold coins are easier to sell than certificates. Physical gold coins don't require storage fees.
- Diversify your Portfolio. This is how you spread your wealth. You can invest in different assets. This helps reduce risk and gives you more flexibility during market volatility.
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