Stocks, bonds, and crypto are all essential components of any modern investment portfolio. However, all of these are predated by one of the oldest precious metals: gold. Gold has been seen as an important investment asset for thousands of years, and that has changed little in recent months.
In fact, gold investment levels are predicted to skyrocket in the coming year, following several years of near-record prices. But is gold as an investment right for you? Read our two-minute explainer to find out whether investing in gold is right for you and your financial security in 2022.
1. Gold As An Investment Safe Haven
Gold, particularly gold bullion and gold coins, are often touted as a “safe haven” investment for when markets are rocky. That’s why gold prices often skyrocket during recessions and financial crises. This is because gold will often retain much of its value when stocks and currencies plummet. If you are looking to safeguard your portfolio against uncertain times, gold investment can be an effective way to do it.
2. Gold Can Diversify Your Portfolio
A diverse portfolio is one with many different assets in it. The idea is that, if the value of some asset classes falls, the value of others will rise, balancing out your losses. Various gold assets, such as gold futures and gold jewelry, are a great way to diversify. Gold’s value is not connected to real estate, stocks, or currencies, making it an important form of diversification for any investor.
3. Safely Investing in Gold Has Never Been Easier
It’s also worth noting that it has never been easier for small-time investors to buy into gold safely and quickly. There are many reputable gold investment services that will put your money into real gold and store it safely for you. For example, you can check out this Birch Gold review by RareMetalBlog to find out everything you need to know about one of the most well-known gold investment services on the market.
4. When Should You Buy Gold?
Another important question is when you should actually buy gold and add it to your portfolio. Since gold is a solid safe-haven asset, it is usually best to buy it during times of financial market turmoil. In addition, gold is often bought during times of high inflation, since it acts as a reliable hedge against it. If you are looking for an asset that will allow you to generate income, gold is not suited for the purpose, as it will not generate income for you in the short or long term.
5. Be Aware of Lower Returns
It is also important to remember that gold does not usually generate high returns. If you compare gold with, say, the S&P 500, this is clear. While the S&P 500 has delivered returns of around 100% over the past five years, gold has produced less than half of that. The value of gold is in its ability to retain value over time, not as a means of getting rich quickly.
Future-Proof Your Finances in 2022
By choosing gold as an investment, you can take one step closer to future-proofing your finances in 2022. For more expert advice and insights on building a rock-sold portfolio, we have got you covered. Make sure to consult our dedicated Finance guides to learn more.