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Gold and shares are both attractive options for long-term investment. However, they offer very different things. While the rewards from shares can be big, they come with big risks. Gold is about long-term security and protection against uncertainty.
When deciding where to invest your money, it can be something of a minefield to know where to turn. The stock market is an obvious option, but can it rival the security and tangibility of physical gold? At two opposing ends of the investment spectrum, gold and shares represent very different financial opportunities.
Gold price has risen by 4,455% since 1965 (not including inflation). More recently, it has experienced an increase of 400% between 2012 and 2015, making it one of the best performing assets of this millennium. Why?
Because it is a physical asset, gold is seen as safe and reliable, and something that will never go out of fashion. This has always meant that, when the markets seem uncertain, gold tends to do well. In addition to its history as a form of currency, gold is also in demand for decorative and industrial purposes, while its rarity guarantees stability even when the economy is in crisis.
What’s more, there are a whole host of other benefits to gold investment, including attractive tax breaks and the ability to sell your gold very quickly should you need to. Investments are always risky, but gold represents one of the safest and surest options out there.
Investing in shares is a different prospect. While there are compelling success stories out there, it isn’t unreasonable to suggest that these generally involve the very lucky, or the very skillful. For an average investor, success is often harder to come by.
However, investing in shares can be rewarding, as you can invest in businesses that you are interested in, or passionate about. This could be a soft drink franchise, a green energy scheme or your local sports team. Hopefully the business will create products and services which will continue to be valuable far into the future.
Another aspect of investing in shares is that they provide dividends, money paid to investors from company profits. This means that investing in shares provides income, although this will be small compared to the amount you invest.
Prospective investors should be mindful, that shares come with a higher risk than almost all other forms of investment – get your calculations and estimations wrong, and you could wind up with nothing.
If you are happy with risk, in a stable economy there might be a case for investing in shares over gold – especially if you already know what you’re doing.
But with the world and the economy in the state they’re in, investing in shares has become ever-riskier. With high levels of volatility and uncertainly, the balance between risk and reward in today’s economy isn’t what it has been before.
It’s almost impossible to predict what will happen in the coming months and years. Brexit looks set to put a dent in industries across the UK and perhaps even Europe too, while the presence of Donald Trump in the White House has soured diplomatic relations between the world’s greatest superpower and nations around the globe. Trumpian diplomacy is set to raise tariffs and walls across the world, and slow the global economy.
The detrimental effect that these circumstances could have on the stock market should not be underestimated. With all of this mind, it only makes sense to invest in a commodity that has demonstrated consistency over recent years and is projected to do so in the coming ones.
Stability and security are the name of the game when it comes to gold investment, and in times of such political and economic uncertainty, gold is the sensible option for investors looking to safeguard their assets.
As well as this, gold offers the opportunity to diversify. Savvy investors may take risks, but they protect against them by investing in something like gold.
Managing stocks and shares can seem like a fun and engaging way to make your money work for you, but even if you know what you’re doing in the world of bull and bear markets, keeping abreast of all the latest developments can quickly turn into a full-time job. Gold, on the other hand, is safe, easy and incredibly convenient, with tax break advantages and rapid liquidation opportunities, allowing those with their finger on the pulse to both shore up their finances and make tidy profits as and when the possibilities arise.
Both gold and shares have their respective advantages and drawbacks, but in times like these when the future and the economy are uncertain, gold is the clear winner when it comes to long term investment.