Gold vs. Stocks: What You Must Know First

The stock market may seem too dynamic and confusing to most people. On the other hand, investing in gold may look like an old-fashioned term of investing. Either way, both gold and stocks are good ways to invest your money for either future return of investment, additional funding on the side or simply to have assets you can liquidize in case you need quick cash.

However, how do you choose to either invest in stock or gold? The answer to that question is entirely up to you and what you want or expect from your investment. Both options have their benefits and downsides and it’s up to you to decide which one is the most suited for your needs. Here are a few things you should know before you opt for either stocks or gold.

Stock options

Stocks are generally the most popular means of alternative investments. Although many investors are confused and intimidated by the stock market at first, it’s isn’t really so bad once you get a hang of things. Purchasing stocks means purchasing some company’s assets, such as property and incomes. It officially makes you a shareholder in that company. In the U.S. stock market, you can expect an annual ROI of 12% on average.

Also, there’s a payoff from dividends as long as you don’t sell the stocks you have. What’s more, if the stock prices go up, you can sell your shares for a one-time profit or buy more shares if the price goes down. Looking at the long-term investment, you can expect a 360% increase in your investment value over the 30- to 40-year period. For instance, that’s a good way to secure your retirement fund.

Investing in gold

Gold has always been a highly sought-after investment method by investors who wish to diversify their portfolio. There’s not much volatility in gold prices, which means you can either keep it until you need it for cash or you can sell for profits if the price goes up. However, gold won’t yield any significant profits, but it’s an excellent hedge against inflation and economic instability.

In other words, gold has inherited value and it will always be in high demand. Simply put, investing in gold or choosing to buy precious metals is a good way to secure your investments. Gold has many uses in various cultures and industries, which means that it will always be highly sought after. Moreover, you’ll always be able to find a buyer for your gold investments.

The risks of the stock market

Stock exchange can make an investor very rich. It can also be an excellent way to gain additional income. However, the stock market is known to experience oscillations, instability and high volatility. Not only that, but the stock market has crashed on more than one occasion, with the crash in 2008 being one of the most impactful crashes so far.

If such event occurs, you can easily lose your entire investment. The longer you plan to hold on your stock investment, the more chances of something going wrong, because the more time passes, the higher the risks are. This is especially true, since modern world is in a very unstable geo-political and economic situation. That means that there’s a high probability of another economic crash on the global scale.

Diversifying for the safe bet

When talking about stocks vs. gold, it’s not really about which option will you choose as a better one. Neither option is a guarantee, but both options complement each other well. That means you must consider both options if you want a safe bet for your investments. Stock investments can provide long-term benefits for any investors. On the other hand, in case of a stock crash gold prices tend to skyrocket.

If you have invested in both stocks and gold, it means you’ll be able to minimize and mitigate the risk of losing your entire investment. Portfolio diversification is the only safest method of ensuring you’ll have secured profits and funds from your investments. That being said, don’t ponder on which method to go for. Instead, create a plan that will help you include various investment methods, so that you can be sure that you made the right choice.

Investing in stocks is a good investment method that can yield considerable ROI, while investing in gold is a good way to secure your funds for later. Choosing only one option may not turn out to be a profitable as you’d hoped it to be. Instead, plan on using both options, so that you can be sure that you made the right investment.