Different investors in the market will tell you that it’s a must to have gold in your portfolio. They will even go ahead to tell you what percentage of gold should be included in your investment portfolio. Others will say 20%,30% or even %50%. However, what matters is how you plan your investment. Why should you include Gold in your investment portfolio?
Here are the top 3 reasons to include gold in your investment portfolio
- Gold is a hedge against inflation
This is the main reason why you should include gold in your investment portfolio. Over the years, for more than 6,000 years, gold has managed to do well and remain functional in terms of inflation and deflation. Usually, inflation can decrease the power of a dollar but gold in the other hand can help you hedge or fight against losing the value of the dollar. As we may all be aware, the price of gold keeps rising.
In the market, Gold works the opposite of the dollars. When dollars depreciate in value, gold rises in value. The good thing with gold is that its value remains the same or does not go way too much down.
- Gold is the world’s strongest currency
Gold has been valuable for so many years. It has been used over in over and it has managed to maintain its value. Today, man has created other forms of currencies such as us dollars. These other forms of currencies are known as flat money. Another type of flat money is the Singapore dollar. Gold is tangible and one can see it thus making it the best for including in your investment portfolio. However, it’s important to keep in mind that gold prices rise and fall just like prices of any other assets. The difference between these two is that gold is limited in supply while flat money is readily available. When supply for gold is limited, demand is high. When demand is high, the price of gold goes up. Gold is used in many ways including in jewelry, medicine, vehicles and there is Gold stored in gold bars.
- Asset diversity reasons in your portfolio
Bonds and stocks provide adequate diversity to your portfolio. However, adding Gold can contribute to creating even a higher diversity no matter what percentage of Gold you add. Gold prices often move opposite to the prices in the stock markets. When stock markets decrease in value, gold shoots higher. Gold can be the best way of adding balance to your investment portfolio thus diversifying your assets. An important thing to note is that the price of Gold is always higher than that of the stock markets.
Gold can be of great impact to your portfolio. But this is if you know why you are including it in your portfolio.it can help you achieve your financial goals. Usually, the key to succeed in investments is not to find the asset class that is on the top of the performance list but to come up with something or an asset that can work well in most cases. Gold goes hand in hand with other investments such as equity and debt thus allowing the investors to create a long-term asset that can work in all markets.