‘Is gold a worthy investment?’, this is natural and prudent for every investor to wonder if he/she should invest in gold. The question becomes more significant because the investment in consideration is an inert metal that doesn’t earn much interest. Yet, gold continues to be the most popular investment for all ages and is respected around the world for its rich history and value. There are several benefits of choosing gold for the purpose of investment leading to a steep hike in the prices of gold whenever any turbulence in the global equity market is noticed or any tension crops between the powerful countries of the world.
The gold buyers in Brisbane need not worry and be skeptical about their choice of gold for investment as the metal has always commanded a good value in the financial market for centuries and one can rest assured of good valuation for it even in times to come. Other investments like currency, real estate and mutual funds may turn risky, but investment in gold remains relatively stable.
Still in doubt about the decision to invest in gold? Let’s understand why gold is a safe haven for investors and why one should consider gold in their investment portfolio:
Gold has been used as a currency in ancient times, and even now it is quite easy to buy and sell gold. Gold, being a tangible asset comes with a long-term value in comparison to other assets and currencies. These days, one can also avail of a gold loan without any hassles. The presence of digital gold has further made selling and buying gold seamless. It just takes a couple of clicks to buy and sell your favourite asset.
Hedge against inflation
As we all know, inflation leads to a downfall in the currency’s value. Even the currencies of major countries have faced depreciation in the long run, in comparison to the value of gold. Therefore, holding money in the form of gold is a good investment particularly when the inflation rate is high. It is the best hedge against inflationary conditions.
Low real rates
The high inflation backdrop also makes the fixed-income investors search for high-interest rates to protect their purchasing power. But current inflated environment calls for lower or even negative interest rates. In such events, investors find gold to be an attractive investment avenue that not only protects their purchasing power but also, acts as a hedge against inflation.
History of increasing in value
Since the discovery of gold as an asset, it became a coveted commodity that is a storehouse of value. Unlike the paper currencies, coins and other asset forms, gold has maintained its value as an asset through the years. This is the reason, gold is often seen as a way to pass on and preserve the wealth for generations to come.
When you invest in gold, you get the chance of holding it in your hands (that applies to even buying gold nuggets too!), which you can never do with most of the other items present in the investment portfolio. Real gold is safe even from the advent of water or fire or time. And like commodities, it doesn’t require maintenance. Being a tangible asset, it can’t be destroyed, erased or hacked. It is thus probably a good idea to store gold in digital form to ease yourself from the gold eagles.
The key to the diversification of a portfolio lies in investing in unrelated products. Gold, as an asset, shows a negative correlation with financial instruments and stocks. Hence, it is considered to be the perfect choice for diversification of the portfolio and ensures a reduction in the overall volatility as well as risk.
Requires no specialized knowledge for investment
Can you spot a diamond? Can you look at the paintings to tell which one is real and which one is fake? Can you pick stocks for your investment portfolio without acquiring the necessary know-how? But, do you know gold doesn’t require any of the aforementioned aspects! There is no requirement for special skills, equipment or training to recognize or buy gold unlike its other counterparts such as real estate, cryptocurrencies, stocks, bonds etc. All you need to do is simply buy gold and keep it. You don’t need to compare any tedious charts or trading bots for that matter. The approach to investing in gold is quite straightforward.
Good avenue for savings
Savings money now is essential for maintaining a regular income in the future. However, certain investments such as real estate can’t be sufficed in small amounts of money. But, when you invest in gold, you can safeguard your money for the future and enjoy a good return on it in the long run. The best thing is you can buy any quantity of gold as deemed fit for your portfolio, and current funds availability.
What should you go for?
Though financial advisors don’t recommend investing in gold, a better approach is to go by the asset allocation and invest a minimum of 10% of the portfolio in gold. This can be done via exchange-traded funds or a combination with other assets. This would serve the purpose of supporting the portfolio when the market turns volatile. When you deal in gold, the correct timing of your entry as well as the exit is of much significance.