A lot of people – especially the youths, keep wondering whether gold is a good investment or not. These days most people think of investing in real estate properties and cars, but they are not much keen on investing in gold, be it jewellery or bars.
But as per financial experts, they must invest in that. They can easily buy gold and can keep them securely in a gold locker with a bank. Here are some major benefits of doing that:
Well, one might ask what the function of gold in a portfolio can be. Yes, gold is quite important for portfolio diversification. It has 3 different characteristics which are not present in other precious metals like copper, silver, and platinum. These differences are because of its returns, volatility, and external market conditions. So, if one wants, then they need to allocate at least 5 to 20 percent of gold in their portfolio so that they can get a good risk-reward from their construction standpoint. This is the right amount for any common investor.
Safe Haven Asset
The global trade of gold makes it a hedge against currency depreciation and even inflation. During the normal time, it can maintain pace with inflation by protecting the purchasing power of the capital. And in bad times, gold can act as a great hedge in the portfolio. Gold can also be used as a proxy currency which can also be an accessible retail asset. Hence, it is known as a safe asset when there is a time of crisis or during a time of high volatility. These times can also include financial crises, pandemics, or during some socio-economic disturbance in the country. When there is a crisis in global currency, the fold is considered to be a reliable investment. During a time of volatility, the demand for gold always increases. This happens because gold is a high-value asset, and it can be portable as well.
Delivers Positive Returns
Gold has always delivered some significant positive returns, and they have also done well during both high and low inflation. It can preserve its purchasing power for a long duration. In recent past years, the price of gold has also gone high. So, it does not make much sense to put the money in banks that have low-interest rates, especially when there are high prospects of inflation. So, buying gold means a long-term investment.
Excellent Future Prospects
An increase of 40 percent in gold makes it the best performing asset. So, there is a bold reason to buy gold now. According to many experts, this makes sense because they suspect a further increase in the price of gold.
If one buys gold (jewellery or in other terms) can be put in gold safety lockers. These days there is also a rise in demand for digital gold. One can also buy gold online in small amounts if they do not have much money to spare. This is also another great way to invest in gold.