In today’s economy, it’s prudent to allocate a portion of your income for your savings, whether it’s for your retirement nest egg, your kids’ trusts, or emergency funds. Setting up a bank account is one way to go about this endeavor. However, you might also want to consider investing in gold.
Gold has always been viewed as a viable asset because of its timelessness and liquidity. Modern platforms and apps have also made the process more straightforward. For instance, Gainesville Coins allows you to trade on the spot price of gold, which allows you to make the most out of your investment.
Here are the reasons why you should invest in gold:
1. Long-Term Store Of Value
As mentioned above, gold is considered timeless. It’s been used as a currency for thousands of years and will continue to store value in the future.
Gold is an ideal asset for inheritances and retirement nest eggs. It’s highly valuable and consistent, which means that you and your beneficiaries can enjoy the benefits that it offers conveniently, even in the long run.
When you buy stocks for your kids’ trust funds, there’s a chance that the company you invested in might not be in operation when they inherit. Fiat currency could also lose its purchasing power due to inflation.
On the other hand, gold will remain to be useful in the future. Plus, it has a liquid nature, which means that it can be converted to cash when you need it.
2. Portfolio Diversification
Another reason to invest in gold is to diversify your portfolio. This strategy allows wise investors to mitigate the risks that entail their investments.
For example, with today’s coronavirus pandemic, stocks in affected industries, like airlines, restaurants, and hotels, have plummeted. If you’d bought gold or invested in shares from a gold mining company, you would’ve balanced your losses from these assets since gold’s value has risen to record highs recently.
You should be aware of the different types of gold investments, such as:
- Bullions – These come in bar or coin form. They have a tangible nature, and their price is determined through its weight, although some coins are considered more precious due to their historical value rather than the amount of gold present in the physical asset.
- Jewelry – This is another investment that you can hold in your hand. The appeal of gold jewelry lies in its historical or aesthetic charms.
- Stocks – If you prefer something intangible, you can opt to invest in stocks with gold mining companies. These institutions are relatively stable and can provide a decent return.
- ETFs – Exchange-traded funds (ETFs) aim to track the price of gold. They’re usually derivative investments, which means that the fund provider offers the underlying assets, but you’ll be trading on their index or value.
3. Tangible Asset
The primary advantage of gold is that it’s tangible. Unlike stocks, bonds, or ETFs, you can literally hold the precious metal in your hands, which can strengthen your perception of the legitimacy of your investment.
However, one thing you should remember when investing in bullions is that you need to find a safe place to store them. You have the option to keep them in a bank’s vault storage or purchase a sturdy deposit box for your home.
4. Limited Supply, Endless Demand
With more people investing in gold and purchasing jewelry, the demand has grown. However, the supply has dwindled. The recent gold rush makes it more urgent for you to take advantage of the situation and purchase the precious metal since its value is predicted to increase in the coming months.
This type of seemingly endless demand means that you can easily sell your gold bullions, stocks, or ETFs when you need the cash because there’ll always be someone who’s willing to buy.
5. Inflation Hedge
Gold can be bought and sold similar to commodities. Its price also follows the rise of goods, which is why investing in this precious metal can give you protection against inflation. Its value is inversely correlated with the purchasing power of fiat currency, so it’s worth surges during times of economic crises.
Historically, gold was used as currency and continues to be a store of value even today. This factor, along with its tangible nature, makes it an excellent long-term investment. Moreover, there’s an endless demand for the precious metal, which ensures that you can sell it off when you need money for emergencies.
Gold is also ideal for portfolio diversification to balance the risks that your other investment assets entail. Lastly, it provides protection against inflation since its price increases when the value of fiat currency decreases.