How to Diversify Your Portfolio with Gold and Silver?
You may have heard expert investors asking the newbies to dedicate at least 10% of their investment portfolio. Advice coming from the top experts is something that every investor is likely to follow and follow with a dear heart. But when it comes to diversifying your portfolio, you may wonder about the best ways to do it and why you should do it. If you are going through a similar confusion, here is why and how you can diversify your portfolio with gold and silver to your investment portfolio and sit back without keeping an eye on the interest rates, inflation, or any other factor that may affect the value of money.
Why Should You Diversify Your Portfolio with Gold and Silver?
Experts believe that gold and silver should at least constitute 10% of the investment portfolios. There are many reasons that back up this statement as gold and silver have been the most traditional assets owned by people around the world, since the time when the concept of investment was still new. Here are some reasons why diversifying your portfolio with gold and silver must be the need of the hour.
Hedge against Inflation
Gold and silver investments are considered as a perfect hedge for the portfolio. During inflationary periods when other types of assets like stocks and cryptocurrencies tend to decrease in value and hurt your investment score, gold and silver on the other hand increase in value and balance the value reduction of your portfolio because of other assets.
Safety Net during Downtimes
There are always some unforeseen events like the recent Covid-19 pandemic and geopolitical tensions like the Russian-Ukrainian border conflicts that create very severe impacts on the world economy. As a result, investment markets like the stock market and crypto market face very rough times which in turn pushes investors to look for a safer haven like gold and silver. The demand increases and hence, the prices also increase.
Value Increases over Time
If we look at the data for gold and silver prices over the last 50 years, we will be able to see that the gold and silver prices have increased significantly over time. Consequently, the purchasing power of gold and silver has also increased.
Diversification of the Portfolio
The greatest investors of the world believe in adding a variety of assets in their portfolio so that if one asset reduces in its value, the other asset increases and balances all the dips. Therefore, gold and silver help investors in diversifying their portfolios and creating a hedge against downturns.
Easy to Buy
In comparison to other investment assets like stocks, and cryptocurrencies which need a lot of knowledge and expertise to make the right investment decision, gold and silver are extremely easy to buy. Hence, they provide a good scope for investments even for the people who do not have access to other investments assets and the training material to make informed decisions.
How to Diversify Your Portfolio with Gold?
Gold is a perfect asset that has absolutely zero correlation with other investment options like stocks. This is one of the most important factors that makes gold a must-have component of your investment portfolio. Here are five easy ways to invest in gold.
Gold ETFs are just like mutual funds with the backing assets being gold. Therefore, each unit of a Gold ETF represents one gram of gold of 99.5% purity. There are no making charges applicable on Gold ETFs and you can easily accumulate the required amount of gold over a period of time.
Sovereign Gold Bonds
Sovereign Gold Bonds are issued by the government and each unit of these bonds is traded against one gram of gold of 99.9% purity. The annual interest that is applicable on these bonds is paid to the investor in two halves, that is, after every six months.
Gold Stocks are basically the stocks of the company that performs gold mining operations and works in related fields. Eldorado Gold and Barrick Gold are some of the popular gold producers whose gold stocks you can buy and diversify your portfolio with gold.
Digital gold has gained popularity among investors only recently because of its various advantages over other gold assets such as no additional storage costs, risks of thefts, etc. Platforms like MMTC Pamp, Augmont Gold, OroPocket, SafeGold are offering digital gold services starting from Rs. 1. You can also convert your digital gold to physical gold and receive it at your doorstep whenever you want.
Gold coins had been used as a medium of exchange in the early centuries. At present, gold coins are a great investment asset to diversify your portfolio with gold-based investments. You can buy gold coins easily from physical stores as well as online stores.
How to Diversify Your Portfolio with Silver Investments?
Silver has been used for various industrial purposes besides being a great investment asset. It is because of this reason that silver has witnessed such a significant hike in prices over time. So, here’s how you can add silver to your investment portfolio.
Digital silver is one of the best ways to buy silver and add it to your investment portfolio. You can start investing in silver AIPs, silver tokens easily within a matter of five minutes or even less.
Silver coins are just like gold coins. You can buy or sell them at physical and online sellers. It is important to note here a 20% tax is applicable on the capital gains over the encashment of silver coins if you hold them for more than three years.
Silver ETFs are much like Gold ETFs. The difference lies only in the backing asset which is silver in the case of silver ETFs. In this, a minimum of 95% of the corpus of the mutual funds should be invested in silver.
Tokenized Silver is a cryptographic representation of silver coins. You can buy and sell tokenized silver on the blockchain network backing them. It is an improved way of buying silver coins without having to step out of your home.
Gold and silver should be an indispensable part of your investment portfolio. If you are looking for the easiest way to invest in gold and silver, an auto-invest plan should be your way to go. In this plan, you can select the amount of gold and silver that you want to invest in and choose the frequency of investments (daily/weekly/monthly). That’s it!