Gold and shares can both be attractive options for investment. However, while the rewards from shares can be big, they come with big risks. Gold is about long-term security and protection against uncertainty.
The graph below tracks how much an investment of £10,000 in gold and one on the FTSE 100 would be worth, tracked against inflation from 2000.
As you can see:
- An average FTSE 100 investment of £10k: is only worth a little over £25,800.
- £10k invested in gold: would have been worth £83,700k at the end of 2022, significantly more than the rise in inflation
Investing in shares is never without risk, but the global pandemic was another stark reminder that market shocks can occur very unexpectedly. While the UK stock market has largely recovered the losses from 2020’s plunge, there is substantial volatility against the backdrop of rising inflation and the cost-of-living crisis. In addition, global investments have been far less robust than the UK. US markets have been under pressure, the Nasdaq lost almost 30% between Dec 2021 and Dec 2022, and Euronext was down 17% in the same period.
The Safe Haven of Physical Gold
Gold on the other hand has proved time and time again that it can protect against financial uncertainty and offer a chance to grow your investment portfolio. In sterling terms, gold rose around 15% in 2022, and long-term growth has vastly outperformed other asset classes. Meanwhile, the upsurge during the pandemic was a reminder to gold investors that it can be very effective protection in these volatile times.
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