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In the past year, the Dow Jones has experienced a 14.86% drop.
If you invest in stocks, you might’ve experienced a large drop in the value of your portfolio. If you’re in this position, you might be interested in moving your money into gold rather than stocks, as this can help you limit losses.
Read on, and you’ll learn more about why you should diversify your portfolio with gold. Once you’re done reading, you’ll see why gold is a great asset class for anyone interested in investing.
1. Gold Is a Tried and Tested Store of Value
Gold has been used for thousands of years as a store of value, and people still trust gold as an asset class.
If you look at historic charts, you’ll notice that the price of gold typically tends to go up during a recession. This tends to happen because people trust gold to hold its value more than “fiat currencies.”
Now, a lot of people might suggest that “cryptocurrencies” are a good alternative to commodities like gold. However, while many are arguing this, the numbers tend to suggest otherwise.
For instance, the price of gold has remained relatively stable in the past five years when compared to cryptocurrencies. Of course, gold definitely hasn’t experienced the same peaks as cryptocurrencies such as “bitcoin.”
But, the flipside of this is that gold also hasn’t experienced the same drops in value either. This is because, generally, gold doesn’t experience massive peaks and drops in value in a really short period.
Thus, in periods of volatility, it’s often a good store of value as you can rely on it, and this makes it ideal for people interested in diversification.
Plus, if you look at the value of gold over a 20-year horizon, you’ll see it has risen in value. So, even though it might have experienced a few drops here and there, on the whole, it actually becomes more valuable over time.
This is good if you are worried about inflation. After all, if you leave money in the bank, it’s going to lose value due to inflation. But, if you invest in gold, your net worth will often improve, even if inflation rises.
2. It Is Very Easy to Buy and Sell
Because a lot of institutions have faith in gold and its ability to hold value, you’ll find that it is very easy to buy and sell.
This is a really important point because some people tend to forget this when investing in certain asset classes.
For instance, a lot of people tend to choose “property” as an asset class.
However, if you put money into property, you will often have to wait a long time to release your funds. That’s because it can take a while for you to sell a property and release the equity.
Of course, you could take out a loan against the property, but this process can be tricky. That’s because it can still take a while for you to find a company that is willing to help you with this.
Plus, you now have to pay interest on this loan, and that means you’re paying a fee to access your equity in the property.
On the other hand, with gold, you can pretty much sell it in a matter of minutes.
That’s because, if you have gold, you can just go to a physical location that buys gold and then sell it to them. There are even online gold merchants that buy gold from investors.
Now when doing this, the company in question might have to perform a few tests on your goal to verify its authenticity.
However, this process is often a lot faster when compared to how long it takes to offload an asset class such as property.
By the way, buying gold is a really easy process too. For instance, if you want to diversify your portfolio and invest in gold, you can just buy gold bars online. Thus, whether you’re buying or selling gold, the process is generally very fast.
3. It Is a Simple Investment
One of the great things about gold is that it’s a really simple investment vehicle.
For instance, if you’re going to invest in the stock market, you will need to do a lot of studying. You will need to read stock charts, and you’ll need to figure out which company is going to have a promising future.
Even if you’re going to invest in something simple like an index fund, you will still need to identify the best option on offer, and this can be tricky.
If you’re going to invest in property, you will need to identify a location that is going to hold or increase in value. You might then also have to deal with tenants if you are renting out the property.
Either way, if you make a mistake with any of these options, you might end up losing a lot of money.
With gold, though, you don’t really need to worry about any of this.
Aside from researching the company you’re actually buying the gold from, there’s no real major due diligence you need to do on the gold itself. You just buy the gold and then leave things at that.
Your gold might then experience changes in value, but these changes will often be minor when compared to other asset classes.
Therefore, if you’re looking for a hands-off way to diversify your portfolio, gold is one of the best options on offer.
Time to Diversify Your Portfolio?
Now that you’ve read this post, you should understand the benefits of using gold to diversify your portfolio.
Of course, investing in anything is always a risk, and so it’s fair to say that gold isn’t one hundred percent safe. Thus, you may want to do some more reading on this topic before you put a bunch of your money into this asset class.
In any case, as long as you keep on studying this topic, you should eventually find out if gold is a good fit for you or not.
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