Financial planning has always been a tricky sort of thing to do.There’s a lot of intricacies involved, after all, and it’s almost impossible to completely predict the future.With that said, there are certainly strategies that we can use to improve our chances of financial freedom later on in life.
For most of us, after all, that’s the eventual hope.Of course, that’s a lot easier said than done, especially these days.To say that we’re living through some uncertain times is an understatement.This makes it even more important to consider our futures, though.
All of this is to say that investing is always a hot button topic, but right now we’re at a key moment.The past few years have taken their toll on a lot of us.That’s why today, we’ll be discussing five reasons that you may want to add precious metals to your investment portfolio.
Now, if you didn’t already know, the most popular precious metals for investing are silver, gold, platinum, and palladium.Gold is probably the most prevalent amongst those, for a whole slew of reasons. Still, though, they all have their uses, so it’s worth keeping an eye on all of them in terms of tracking market prices.
For our purposes today, we’ll be mostly referring to gold. However, keep the other precious metals in the back of your mind – much of this advice is applicable to them as well!With that said, let’s delve right in!
One: It’s a Long-Standing Form of Storing Wealth
Although this may seem a bit strange at first, let’s take a moment to go back and look at our history.As you can see on this page, precious metals have long been a way for the wealthy in our societies to hoard their wealth.Perhaps a betterway to put it is that they store it in precious metals, but the point remains the same either way.
This raises an interesting question, though – why have we been drawn to these metals for such a long time?Since their discovery, pretty much all precious metals have really drawn people in.The only exception to that is platinum, which was not recognized as being different from silver by the Spaniards during their colonization of Meso-America.
Long story short, folks have held gold in particular in high esteem for centuries, if not thousands of years.For quite a while, the main function of gold was to be turned into coinage.However, jewelry was another common way that it was utilized. While coins were widely circulated, having a piece of jewelry made of gold was quite the status symbol.
Does this sound familiar?If so, it’s probably because precious metals function similarly today.Although most of our currency isn’t made of pure gold, certain coins that fall into the proper percentage can be used as investments.
Overall, there’s a good reason that gold has been popular throughout history.The lesson we can take from all of this is that we can use gold as a way to store our wealth in a form that isn’t paper currency.
Although a lot of collectibles aren’t necessarily eligible for something like an individual retirement arrangement, it doesn’t mean they’re not valuable in their own ways.So, that’s why this is our first reason.
Two: It Can Protect You Against Inflation
It’s not exactly a secret that inflation has been a huge problem in the past few years.In fact, in 2022, we saw some of the worst rates of inflation since the Great Depression.Many of us were reminded of the crisis in 2008 as well.This combined made a lot of people start to wonder how they could keep themselves safe from the fact that the United States Dollar has lost a lot of value over time.
As it happens, this is a question that’s been asked millions of times throughout the centuries.Plenty of studies like this one have been published, especially following the events of 2008.Turns out, one of the best ways to protect ourselves from these issues is to invest in precious metals.Why is that, though?
The answer ties into our first reason – the fact that gold doesn’t really lose value over time.Rather, it’s something that tends to stay at relatively the same price over large stretches.Now, watching the market on a daily basis shows some fluctuations, but it’s important to view this from a wider scale than that.
Three: It’s a Secure Form of Investment
Given everything that we’ve discussed so far, this probably comes as no surprise to you.However, it’s still important to make note of.Because of the nature of precious metals, they’re considered to be relatively risk-free.
Even in times of great geopolitical uncertainty, a lot of investors feel safe going for precious metals.Sources such as Investors Circle make note of this in their programming, amongst others.This is because of the fact that even if the world economy is suffering, the prices of something like gold won’t drop.
While that might seem odd, there are a few factors at play.Mostly, though, it’s due to the fact that even in times of hardship, we continue to perform and continue our cultural practices.Often, gold or silver take a part in that, meaning that there will pretty much always be demand for them.
Four: It Helps You Diversify Your Portfolio
Anyone who has been interested in investing or has started to hold some assets of their own has probably heard this cautionary phrase said before: don’t put all of your eggs into one basket.While it’s a bit cheesy, it’s advice that we should take to heart.When you’re starting to select your assets that you want to add to your investment portfolio, it’s important to spread them out.
What do we mean by this?Well, like you can read about here, having assets that span across several industries can be quite beneficial.This way, even if one of your investments ends up being a poor decision and doesn’t pay off for you, you have something to fall back on.
It’s not enough to just pick stocks from a bunch of different companies.They need to be fundamentally different – involved in totally different markets.Ideally, they won’t be correlated at all.Of course, that’s just something to keep in mind to give yourself some extra security.It’s not necessarily a requirement.
Five: Demand is Increasing Across the World
Finally, let’s turn our attention to the last reason that you may want to start investing in gold.We’ve hinted at it a few times so far today.Gold isn’t going away as a commodity that will have high demand any time soon.The same can be said for platinum, palladium, and silver.
Admittedly, this isn’t the most obvious thing in the world.One might be tempted to assume that the demand is going down, since there aren’t as many people as before who want gaudy jewelry.The thing is, though, that there are plenty of other uses for precious metals as well.
Most famous is the fact that they’re used in most of our electronics.There’s a pretty high chance that the cell phone, computer, laptop, or any device in between has a motherboard that contains precious metals.You see, most of them are highly conductive of electricity.
Gold is most commonly used in this fashion, although platinum and palladium have made a name for themselves in the car manufacturing industry because of their own special properties.Generally speaking, no matter which precious metal you decide to get involved with, you’re going to be seeing some sort of returns on them.We only have one potential caution to share.
When it comes to precious metals, they will usually be some long-term investments.The idea isn’t really to go buy a bunch of bullion and then go immediately sell it afterwards.Rather, you should store your gold somehow and wait for the “right” time to liquidate.
That will vary per person, of course.For some, it will be during retirement.For others, it could be sooner.Just be careful about when you choose to liquidate and try to watch the market trends for a while before you do so.Being impulsive about it likely won’t do you any favors.
Investing can certainly be intimidating, and it’s no surprise that a lot of people are nervous to start.This is especially true with precious metals, since at first glance it may seem like an “advanced” technique for choosing assets.However, this really isn’t the case.
Once you are able to find a reputable seller and you have some financial experts to lend their advice, you’ll be able to add to your investment portfolio and keep it even more diverse than prior.Trust us – given all the chaos in the world right now, it can be a weight off the shoulders to know that you have a secure form of net worth stashed aside.
