Archive for: January, 2024

Is Gold a Good Investment

Jan 21 2024 Published by admin under Uncategorized

Whenever we talk about gold investment, we will have very strong reactions from the pro-camp and the anti-camp. Both camps will cite very valid reasons for their stance on whether is gold a good investment

Actually, the question is gold a good investment really depends on your personal preferences in investing.

If you are someone like me who doesn’t like to follow the latest business news or researching and dissecting economic and monetary policy, then gold investment is definitely the best choice.

Is Gold a Good Investment ? Characteristics Ideal for Passive Investment

You see, gold has 3 distinct characteristics that makes it great for passive investors, namely

Increasing Purchasing Power Parity Over Time

It does not diminish in its purchasing power over time due to its limited supply. Based on this fact, the actual cost of producing more gold is increasing as we start getting it from more inaccessible places. In fact, the purchasing power of gold can only increase over time.

Universally Accepted Store of Value

This is the main reason why all central banks will maintain a portion of their reserves in gold. This is the only store of value that is universally accepted. Unlike fiat currencies, it’s value is universal and is not affected by Governmental mismanagement of the country.

Safe Haven

You always see huge inflows into gold whenever crisis hits. It doesn’t matter what kind of crisis it is. You see it shooting through the roof when there are geo-political tensions. You also see it charging when there are economic or health crisis.

The reason for this is that all fiat currencies have no value at all. It is a simply a piece of IOU, promised to be paid out when presented. Therefore, its value is based on the confidence that the issuer will pay as promised.

People, however, would want to hold something of substantive value instead, as their confidence in fiat currencies drop amidst the crisis.

Therefore, you will always see it shoot through the roof every time a crisis hits. It can run up a few hundred percent within a very short time.

You will then see it goes back to its steady rise path once the crisis is resolved.

Return on Gold Investment

The compounded rate of return for gold is 7% annually, based on past historical data. You can compare this with your cash deposits in the bank which pays a miserly 1-2%. You can’t even keep up with inflation with that kind of rate of return.

Of course, you can get higher returns investing in the stock market, which requires more work on your part. As for myself, I like the passive nature of it as I just continue to buy and forget about it, without having sleepless nights of what will happen to my wealth when a crisis hit.

How To Start Investing in Gold

You can use a principle called dollar cost averaging. This means that, you purchase a fixed amount of gold at fixed time intervals. For example, 50g (either in bars or coins) every month or quarter. You can then build up your position over time. This will even out the fluctuations of the prices that you paid for your gold over a long period of time.

To get better returns, you can fine-tune this by making more purchases during quieter times when the price is lower.

To get started, register for your free gold investment kit Now

A Word of Caution

One word of caution, though, is that holding physical bullion has a downside which is storage. Storing it at home, of course, opens one to loss due to burglary, theft and fire. Keeping it under lock and key in bank safe deposit also incur a charge. Therefore, keep this in mind when you make any investments in physical bullion.

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What is The Best Time to Invest in Gold

Jan 21 2024 Published by admin under Uncategorized

This article seeks to set down what is the best time to invest in gold.

We will firstly determine the asset class that Gold fits into. Seondly, we will list down its characteristics and trend behaviour . Thirdly, we will discuss how does gold investment fit into your overall portfolio. Last but not least, we will nail down the all important question of What is the best time to invest in gold.

Asset Class

Generally, there are a few asset classes for your investment portfolio which you would need to be aware of. They are cash or cash equivalents, equities, bonds, real estate, commodities. Moreover, these can be further divided into sub classes. For example, commodities can be broadly divided into 3 sub classes of Precious Metals, Energy and other commodities, simply because all 3 have slightly different characteristics which justifies further classification. We can also divide equities into 3 sub classes. They are defensive stable dividend paying stocks, growth stocks, high risk speculative new venture stocks

For a balanced portfolio, it is always advised that you have some investments in all of the above mentioned classes.

So, which asset class does gold fall into. Gold is a very unique asset. It falls under the commodity class and specifically the precious metals sub class. However, it also can be cash or cash equivalents, as a universal store of value. In this respect, it can be traded as a forex pair like XAUUSD, XAUJPY.

Characteristics and Trend Behavior

We will discuss the characteristics for gold as an precious metals asset class, characteristic for gold as an cash or cash equivalent and its trend behaviour

Characteristic of Gold as a Precious Metal

The main characteristics of the commodity class is that it does not pay anything for holding it. It does not bear interest. Neither does it pay dividend. You make a profit mainly from the difference in the price you bought and the price you sell.

Another characteristic is that its value is primarily driven by market demand and market supply. For example, in the case of soy beans, when demand shifts up, the price goes up. And if, there is a supply shock, for example natural disasters affecting soy bean plantation, the price goes up too.

Another characteristic is that there is physical delivery of the commodity that is purchased.

However, Gold is also part of the sub class of Precious Metals which has an additional characteristic of this sub class. This is limited supply. Because it is mined, there is a limit to how much supply there is. You will find that this is especially so for the case of gold. So, in the case of gold, its price is determined more on the demand side, rather than the supply side.

Characteristic of Gold as Forex

On the other hand, its value is also determined by performance of other currencies. That is, when there is a crisis in Japan, gold expressed in japanese yen would go up much more.

Trend Behaviour to determine what is the best time to invest in gold

Gold will reacts to the following factors, namely crisis, currency devaluation and period of high inflation

a. Crisis

In periods of severe crisis, its appeal as a safe haven would cause the price of gold to skyrocket. This is because it is universally accepted and is impervious to what happens in the world. Therefore, in a crisis, when confidence is eroded, flight to safety would mean funds will start flooding into gold

b. Currencies devaluation

During times when fiat currencies are devalued, Gold will automatically rise against such currencies. So, for those who are in countries where their currency is being devalued, the best way for them to preserve their wealth is through gold holdings.

c. Period of high inflation

You will also find that Gold performs exceptionally well in times of high inflation, especially due to supply shocks. You will notice that it rocketed during the 1970′s oil crisis. What’s more, you see that it made an all time high (in real terms) in 1981 before drifting back down.

Furthermore, you will notice that inflation was going through the roof during that time. So much so, that the Fed chief at that time have to increase interest rates dramatically to curb it.

How It fits into your overall portfolio

You should have some exposure to gold as part of your portfolio. Gold is usually counter-cyclical. When equity prices is high and gold prices are low when the economy is steaming ahead, you would need to rebalance your portfolio. This is done by cashing out some of your other investments which seems over-extended and put into gold. This is to protect your overall investment portfolio, when troubles come and equities are taking a beating, your gold investment can help.

What is the best time to invest in gold

I believe you would have already guessed it from the above.

For long term investors

For long term investors, the best time to invest in gold would be during periods of calm before the storm. This is the time when the price of gold would be lowest. During this period, slowly accumulate gold. Hold off or slow down your purchases when the storm breaks. When the storm seems to being resolved, you can either opt to sell a portion of your holdings to lock in profits or wait for prices to come down before accumulating again.

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How to Set and Reach Savings Goals

Jan 21 2024 Published by admin under Uncategorized

Setting specific savings goals will assist you to start save money. once you are just putting money into the bank on a daily basis, it is often easier to withdraw it for various reasons. you’ll easily overspend and use a number of the cash you had earmarked for savings. For these reasons, it’s important to save lots of for a selected target or goal. you’ll be working toward several objectives directly, otherwise, you could also be focused on one specific goal that you simply want to satisfy.

Choose a selected Savings Goal
You need to work out what you’re saving money for. Your savings goal could also be for a deposit on your home. you’ll be saving for a dream vacation or to buy your next car. you’ll be saving for retirement or for an emergency fund. you’ll be saving for all of those reasons. Once you recognize what you’re saving for, then you would like to work out what proportion you would like so as to succeed in each goal. cash loans fasthelp to finance you with feasible interest rates as per assessment so that there is no ambiguity at a later stage.

Create a Savings Timeline
When you have the savings goal and therefore the amount that you simply got to save, it helps to line a timeline to succeed in your goal. this may offer you additional motivation to actively work toward your savings goals.

Some timelines are simple; for instance, you’ll want to travel on vacation for a year or have the deposit for your house ready in two years. For other goals, like saving for retirement or an emergency fund, you’ll want to line benchmarks and dates that you simply want to succeed in these benchmarks. for instance, you’ll determine that you simply want to possess $50,000 in your retirement bank account by the time you reach age 30.

Set Monthly Goals
In order to succeed in your timeline for your savings goal, you would like to work out what proportion you would like to save lots of monthly so as to succeed in it. this could be pretty straightforward for many of your goals, but your pension plan will need to be calculated to account for both your contributions and therefore the rate of return which will be added thereto because it grows.

Find extra cash in Your Monthly Budget
Tally up all of your monthly savings goals into a payment. you’ll get to find that quantity of cash loans online in your budget. you ought to set this up in order that it happens automatically before you even have an opportunity to spend the cash on something else. Some companies will direct deposit a part of your check a bank account otherwise you can have your bank automatically draft that quantity into a bank account every payday.

Decide the way to Track Your Goals
If you’re working toward quite one savings goal, you’ve got several options available. you’ll prefer to put all of the cash into one account and easily keep a ledger at the house of what amount goes to which goal. otherwise, you may prefer to have separate accounts for your savings goals.

For example, you’ll prefer to have one bank account that’s simply for your emergency fund, and another account that you simply use to save lots of for a home or vacation. .It’s always helpful to reward yourself as you reach some basic milestones along the way. this will assist you to stay motivated to stay on target on the way toward your larger savings goals.

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