Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
What Makes Gold A Compelling Global Investment?
Feb 17, 2023
Gold is one of the earliest traded commodities in human history. Gold was common among royals and wealthy families for thousands of years. However, over the years, it has become one of the popular ways to invest your hard-earned money.
Investing in gold is easier said than done. You may encounter several challenges, especially as a newbie investor. For this reason, it's important you research extensively to guarantee you're equipped with the necessary know-how before venturing into this ever-growing industry, saving you from losing hard-earned money.
The following article outlines what you need to know about gold investment. You'll learn the popular ways of investing in gold, why it's a compelling global investment, and more.
What Are The Ways To Invest In Gold?
There are several ways to invest in gold, including:
1. Purchasing Physical Gold
Physical gold (bullion) is available in two forms, coins or bars. It's a popular investment for those who want to 'feel' wealthy, as you commonly see in movies. Due to its growing popularity, there are many suppliers you can choose from. Due to this, it can be challenging to get the right supplier, which can compromise your entire investment. However, consider exploring the Gainesville Coins gold investment options or any other on your reputable local store to make it easier to invest in gold bullion.
2. Investing In Gold Mining Stocks
If you want to avoid investing in physical gold, this might be an option for you. In a typical situation, when the price of gold rises, the value of your mining stocks and shares should also increase. However, it's important to conduct due diligence to ensure you're investing in a mining company with the potential of expanding in the future, saving you from losing your money.
Other popular methods of gold investment include exchange-traded funds (ETFs), individual retirement accounts (IRAs), and gold futures. The method you'll choose will depend on your goals. Hence, research extensively to guarantee you choose the right investment option, boosting your potential return on investment (ROI).
Why Is Gold A Compelling Global Investment?
The following are reasons why you should consider investing in gold.
1. Acts As Inflation Hedge
When investing, consider one thing that might affect the value of your investment in the long run. That is inflation. When there is inflation, the value of fiat currency will drop. Hence, if you have money saved in your local bank, its value may decrease from when you started saving. For this reason, investing in a plan that might act as an inflation hedge is important.
Enter gold investment. Gold has a negative correlation with fiat currencies such as the dollar. Hence, when the value of fiat currency drops, the value of gold is expected to rise, protecting the value of your investment.
However, it's important to understand despite the excellent past performance of gold, it doesn't always guarantee favorable results. Hence, investors need to research the market and reach out to reputable advisors before leaping into this ever-growing marketplace and avoid common investment mistakes.
2. Portfolio Diversification
This is another reason why gold has become a compelling global investment. Although it might be a small moneymaker, gold investment is an easy way to spread out your money across several asset classes, each with a unique risk factor. In other words, it'll help you avoid having all of your savings or money in 'one basket,' which can be affected by one recession or market downtime.
For instance, if you put all your money in paper investments such as stocks or shares, you may lose your hard-earned money over a short period if there's a market crash. However, putting a portion of your money in real estate and another in gold may help diversify your portfolio and save you from the volatility of some asset classes.
3. Liquidity
When you're investing in an asset class, ensure you consider its liquidity. A highly liquid asset class makes it easier to convert your investment into cash to address an emergency or take advantage of market movements. Gold investment is highly liquid, and you can easily sell it on a reputable exchange platform. However, it would be best if you were extra cautious when liquidating your gold investment to avoid being duped by fraudulent individuals out there.
In Summary
In the ancient era, gold was used to make jewelry, and it was common among the royals and the wealthy. However, over the years, it has become an excellent investment plan. The major benefits of investing in gold investment include inflation hedge, portfolio diversification, easy conversion to cash, and more. Reaching out to reputable financial advisors in your locality is always advisable to ensure you're fully informed with all the necessary information before venturing into this ever-growing industry.
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