Gold Versus the Stock Market
When you mention the word ‘investment’, many people think of owning shares connected to an interest in a company. Known as equity shares, this form of investment is often the default for those wishing to dip their toes in the stock market.
However glamorous this form of investing may seem, playing the stock market with shares is no longer an attractive a proposition as it once was, with several pitfalls that potential investors need to be aware of as gold offers a far safer and reliable investment opportunity.
Playing the stock market
There is no denying that owning equities is exciting as many investors profit from the success of the companies they choose to purchase shares in. From big FMCG brands to small startups, playing the stocks can become something of a hobby for many investors, but putting faith into a company isn’t without its risks. The recent volatility of the major markets shows this – we’ve seen huge dips for example in the FTSE 100 and Dow Jones as a result of a political trade spat between the US and China. There is no telling when tensions may spike, causing shares to tank and millions to be lost.
Ups and downs
Investors will most likely feel a rollercoaster of emotions with this form of investment as stocks can be on the up one day and down the next due to a wide range of factors outside of investor control. All it takes is a little negative press, a bad political headline or unexpected economic hiccups (such as a decrease in growth or increase in unemployment) and your seemingly sound stock market investment can be worth virtually nothing and may never recover.
Recovery from dips take a long time to realise, and it really is a game of chance and skill to make the figures work in your favour, so it is better to view stock market investments as more of gamble rather than a reliable method of safeguarding wealth for the future.
Another major appeal for those investing in equities is the regular payments of dividends. These payments are a share of the company’s profits, but unless you are willing to plough a significant of money into buying shares, the outcome probably won’t allow you to lead a lavish lifestyle on the dividends alone.
Although gold does not provide a direct income in the same way, the purchase of tangible gold coins allows investors to trade or exchange smaller amounts of their investments at intervals to suit them as it is always in demand and easy to liquidate.
Growing and protecting wealth
One of the main disadvantages to the stock market and equity shares is the unpredictable and uncontrollable swings that all investors, no matter how big or small, are subject to.
Gold is a tangible asset with a proven track record of sustainable and reliable growth, which actually increases when confidence in financial markets is low, making it a safe haven for investors.
As gold is a way to store wealth outside of the stock exchange and banks, it helps prevent catastrophic losses in the event of an economic downturn and can actually rise in value as all other goods and commodities fall.
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