Since the economic collapse in 2008, a number of investors have attempted to veer away from investment in stocks and property. Instead, they made the decision to invest in gold. In this article, I want to take a little look at how gold investment compares to investment in stocks & shares and property.
Perhaps one of the main reasons as to why people are investing in gold is that it is a relatively safe investment. Historically the price of gold has always gone up. In fact, it has been the only investment vehicle that has maintained its purchasing power throughout the centuries. Whilst the price does fluctuate from time to time, historically it has always recovered. Many analysts predict that the price will continue to rise sharply for the foreseeable future too. This is because demand is rising incredibly fast and there is not enough supply to meet the demand. This is going to have a positive influence on its price. You do not have the same safety when it comes to investment in stocks & shares or even in property.
The worst of the economic crisis is over. However, the world is still trying to recover. Many people who invested in stocks & shares in the past have found that the value of their investment was wiped out overnight, or at least considerably reduced in value. Even now the market is turbulent. What seems like a safe investment today could be one of the most dangerous investments tomorrow.
If you know how to 'play' the stock market then you will make a substantial amount of money. You could also lose everything if things do not go to plan. This isn't ideal if you are planning for retirement or simply want to build 'a nest egg' for the future. Playing the stock market requires much time and dedication - similar to a full time job. No longer can you purchase some shares and leave them to mature. You will need to be constantly looking out for changes in the market so you can either 'take a profit' or reduce your losses early. If you have gold on the other hand, you can just place it into storage. You do not need to worry about it at all. You just have to remember to sell it when you need the money.
The same goes for investment in property. The price of homes can go up or down. Before the recent economic crisis many people invested in property. It seemed like a good time to do so. However, these people were quickly proved wrong when the property market crashed. With the value of properties plummeting, many people found themselves in a position of 'negative equity' - where their property values were lower than the mortgages they had to pay. This, coupled with job losses, meant that repossessions were at an all-time high.
Historical US House Prices Chart
Of course, investment in gold does have its downsides. You need to be aware that gold investment is purely speculative. This means that you are relying on the price going up in the future. You will ONLY be able to make your money back when you sell your gold on. With stocks & shares for example, dividends are paid - usually half yearly or annually. Likewise, if you invest in property then you will be able to gain rental income. Therefore gold investment is not ideal for those that want a stable income. It is instead more suited for those who are planning for the future. This is why gold investment is so popular amongst those who are planning for retirement. This accounts for the recent attraction of Gold IRAs and Precious Metal IRAs. Many people have embarked on Gold IRA Rollovers, converting their existing IRAs to Gold.
More on Gold IRA investing here.
Are You Ready to Start Investing in Gold?
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