Investing is considered as the best method of growing your money. Rather than having it sit idly in your bank account with only minimal interest, you’d earn more when you purchase assets with it. While the strategy entails some amount of risk, the returns are still significantly higher.
One of the crucial questions that aspiring investors usually ask is the type of asset that they should buy. Some would say that it’s better to start with the stock market, while others would urge you to opt for investing in physical gold.
Although both assets are viable investment options, choosing one or the other would depend on a variety of factors. You have to consider the current market, as well as your short-term and future financial goals.
Before deciding on why you should also invest in gold, you have to understand the advantages that each type of asset offers.
Benefits Of Stocks
Stocks are categorized as an equity investment. This means that these shares represent the portion of your ownership of a publicly-offered company. This type of asset has become synonymous with investing, so much so that it’s the first thing that comes to mind when talking about growing one’s money.
Here are the benefits of investing in stocks:
1. Dividend Income
The primary way of earning from this type of asset is through stock dividends. As part-owner of a company, you’re entitled to receive a portion of its profits. A dividend refers to the distribution of income by a corporation to its shareholders. You, then, have the option to keep it for yourself or use it to buy more shares.
2. Multiple Trades
Trading is another way that you can earn from stocks. You can buy and sell shares during favorable times. A lot of investors go for this strategy because of the massive returns when they play their cards right.
3. Low Capital
Purchasing stocks is a feasible option for beginner investors because you don’t need a lot of money to get started. You can start with the savings you have right now and grow your funds to buy more shares.
Benefits of Gold
On the other hand, gold is another viable investment choice for a majority of investors. Although there has been a debate about gold versus stocks, as mentioned above, the best asset depends largely on the market and your financial goals.
Similar to stocks, gold doesn’t require substantial capital. You can also earn through buying and selling gold bullions or bars. This precious metal is deemed as the best way to preserve wealth because of its efficiency as a long-term store of value.
These are the benefits of gold that you should know about:
1. Tangible Asset
One of the best aspects of physical gold is that you can hold your investment in your hands, which enhances the feeling of actually owning something. Moreover, its tangible nature is ideal for apocalyptic situations, where banks and other financial institutions have been destroyed, since you can still use it as currency.
2. Hedge Against Crisis
Speaking of dire situations, the current pandemic has affected a lot of businesses, which may have led to the poor performance of several stocks. However, you don’t have to worry about this type of risk when investing in physical gold. This is why it’s a beneficial hedge against times of crisis.
Gold’s value also isn’t affected so much by inflation. During instances when a currency’s purchasing power decreases, the precious metal’s price rises as people would flock to buy it because of its usefulness as a wealth preserver.
3. Highly Liquid
The tangible nature of gold also makes it highly liquid. This means that you can easily have its value converted to cash by selling your bullions or bars. When thinking about what types of assets to invest in, you have to consider the liquidity of your investments so that you have the option to cash them in during times of need.
4. Growing Demand
The demand for gold never wanes, even when the market doesn’t perform well. With this, you are assured that you can find buyers if ever you want to sell your assets. Jewelry and collectors are two of the factors that influence the need for this precious metal.
While buying stocks is the most practical option for aspiring investors, you should consider investing in physical gold. The unending demand for gold, as well as its liquid and tangible nature, makes it an excellent hedge against crisis and inflation. The precious metal has also proven itself to be a viable storage of value, which is valuable for long-term investment strategies.