How this precious metal can be both your financial safety net and an investment. The original version of this article was published on HelloGold.com.
Putting aside a portion of your earnings into savings is a great way to ensure your financial security in the future. However, what happens if your ringgit falls in value, or your cash goes missing?
To avoid situations like these, it’s always good to diversify your investment portfolio with other financial assets, like gold. Many consider gold as a safe haven that effectively protects your finances during times of risk or uncertainty, while also growing your wealth over time.
Here are a few reasons why gold is viewed as a safety net for your financial life.
1. Gold increases in value over time
Throughout history, gold has always been recognised as a way to pass on wealth over generations. Unlike paper currency or other financial assets, gold can’t be printed to generate more supply, which has helped maintain its value over time.
Currently, the price of a gram of gold is at the average of RM200. Compare this to 15 years ago, when you were able to buy one gram of gold for RM57. Now imagine how much your gold savings could amount to in the next 20 years!
2. Gold is a low-risk asset.
If you’ve considered investing for your future, you’d probably be wondering if you should invest in low-risk or high-risk assets.
Gold is regarded as a low-risk asset because its value isn’t tied to anything apart from itself, which means it will always generate returns. This isn’t the case for stocks and bonds, who are dependent on economic and business performance.
Financial experts recommend that you should have at least 2-10% of gold in your investment portfolio to ensure it stays balanced. If you’ve invested in high-risk assets, you should also have a higher allocation of gold to offset that risk.
3. Gold protects you against inflation.
Over time, we may see a rise in inflation as fiat currency begins to drop in value. This means that the thousands of Ringgit you might have stashed away may not be worth as much twenty years from now.
Gold tends to be an excellent hedge against inflation, as it’s been proven to hold its value when fiat currency loses its worth. In fact, it’s even known to increase in value when the cost of living rises, so you’d always be able to protect your wealth!
4. Gold protects you against times of crisis.
Gold isn’t only useful to have during inflation, but during times of political or economic uncertainty, too. When this happens, gold tends to outperform other investment assets, making it a ‘safe haven’ to fall back on.
You’re sure to protect your financial future with gold should a sudden government or global crisis emerge in the future.
5. Gold’s physical properties are unique.
One of the reasons why gold is so valuable is because of its physical properties, which sets it apart from other financial assets.
It doesn’t rust or corrode over time, has poor resistance in electricity, and is a relatively soft metal that can be easily moulded. This makes it ideal for many uses, from jewellery to electronics. It can also withstand extreme heat, which means that it can’t be easily burnt or destroyed like other physical assets, such as cash.
No other metal is quite like gold, making it an extremely rare and valuable metal.
6. There’s an increasing demand for gold.
Global demand for gold is at the highest it’s ever been, and it’s largely due to an expansion of the middle-class in Asia.
Countries like China and India have cultural ties to gold: for example, gold jewellery is an important feature in Indian weddings, and the Chinese traditionally gift gold to younger generations for special occasions. Combined with a growing population, both countries are making up most of the global demand for gold.
There’s also been an increase in ways to access the gold market, which has contributed to greater demand. This has resulted in an increase in its price, a factor which will probably continue in the years to come!
Saving in gold is a great way to protect your savings for your future.
HelloGold, provides physical 99.99% investment-grade gold at the lowest prices in Malaysia. The gold you buy with HelloGold is fully allocated and insured against all risks. Download HelloGold’s app and start saving now!
Get an RM5 rebate with RM50 gold purchased!
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Have you begun investing in gold yet? Share with us your experience in the comments below.