Precious metals help you to diversify your portfolio and minimize risks. Investing in stocks and shares is not enough to plan your early retirement. It is too risky. As such, you might want to consider investing in precious metals like gold. This is because the value of gold does not diminish over time. Rather, its value only increases with time.
This yellow metal does not rust or corrode. It is also malleable and has great conductivity. Apart from the finance industry, gold also has additional uses in the dentistry and electronics sector. This means that the price of gold increases daily.
Reasons why you should invest in gold
1. A Store of Wealth
You can keep a collection of gold as your personal inventory. With time, you can add and grow your collection. This is a great way of investing because the price of each item will increase with time. You can store the set of gold at a good stable bank or even keep it at home. If you choose the latter, however, you will need to invest in a reliable security system for your home. Whichever place you store the gold, its value will still appreciate.
2. Protection Against Inflation
Every economy records some form of inflation at some point. When inflation rates rise, the value of stocks and bonds depreciate. This translates into huge losses for millions of people. In such instances, however, the value of gold remains unchanged. This is because the value of the dollar per ounce of gold increases as the value of the dollar falls. As such, it is advisable to own physical gold in addition to liquid investments in order to offset the unfavorable effects of inflation. Gold will ensure a part of your investment remains safe and intact.
3. Valuable During Adverse Conditions
In the event of a global crisis, civil wars, or natural disasters, currency tends to lose its value. In those moments, primary necessities like food, health, water, clothes, and housing are more important than money. Even in such cases, gold remains valuable and you can use it to trade for the primary necessities. During such times, you can convert your entire lifetime savings into portable gold and trade it in for safe passage or food. Gold can literally save your life during a global crisis. So, pile up your gold investment for security!
4. Reduced Global Supply
As time passes by, gold mines all over the world are becoming scarcer. Gold stock is becoming limited as the mining and exploration costs increase. On the other hand, demand for gold has been rising. This rise in demand along with the decrease in gold mines indicates that the price of gold will only increase in future. As such, this is a great time for you to invest in it. You can pile up physical gold or opt for paper gold such as equity based gold funds and sovereign gold among many others. Most investors prefer paper gold than physical gold because of factors like storage, security, and liquidity.
5. Increase in Global Market Debt
The global government debt is extremely high at $225 trillion. If history has taught us anything, then another global financial crisis might be on its way. The risks of such a debt are too high, and you must protect yourself as an investor. Investing in gold will ensure that your portfolio remains safe during such an economic turmoil.
6. Increase in Demand for Gold Jewelry
Even in a modern world, gold jewelry has remained highly valuable. Hence, the jewelry market is one of the major factors that lead to the constant increase of gold value. Growth of middle classes will ensure that gold remains precious. When most people become successful, the first thing they think of getting for their loved ones is precious jewelry. From a gold watch to golden earrings, people love their golden jewelry. In 2016, for instance, Indian households had more gold than the top six central banks in the country combined.
How Gold Will Help in Retirement
A gold retirement investment will give you the most prestigious and secure retirement. You can have a gold retirement by keeping at least 5% of your portfolio in gold, gold ETF, or gold index fund. This will shield you from any effects of inflation that may occur before you retire. If you do not have any investment in gold but you have a pension plan, you can start by converting some of your pension funds into gold.