While there’s no such notion as a sure thing when it comes to investing your hard-earned cash, it’s fair to say that some are considerably more stable and popular than others.
Take gold, for example, which remains one of the market’s most predictable assets and is known to perform exceptionally well during economic tumult and uncertainty.
But does this apply during periods of peak inflation too, and what are the broader benefits of including gold in your investment portfolio?
Why is gold a good investment regardless of inflation?
As we’ve already touched on, gold tends to see an increase in demand and its subsequent value during periods of economic uncertainty.
Similarly, the value of gold tends to increase even as the purchasing power of the dollar (and other currencies) depreciates over time.
It’s often inflation that drives down the purchasing power of international currencies, with the current economic climate providing a relevant case in point.
These factors mean that gold represents a solid and high-performance investment during periods of peak inflation and provides a secure store of wealth during austere times.
What are the other benefits of investing in gold?
Apart from offering a hedge against inflation and a secure store of wealth, you should note that there are other benefits of investing in gold. These include:
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Diversify your portfolio
If you’re building a portfolio as part of your investment management strategy, you’ll need to ensure that you include as diverse an array of assets as possible. This helps to minimize your exposure to risk at any given time while enabling you to bank profits regardless of the broader economic climate. Gold plays a crucial role in any diversified portfolio, as it tends to increase in value when most alternative commonly held assets depreciate.
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Access inheritance and legacy
Gold provides a secure and private store of wealth that’s capable of being held for a prolonged period. Not only does this provide an obvious safeguard against economic volatility, but it’s also possible to transfer gold to a loved one subject to the seven-year IHT laws. This makes gold a trendy investment option.
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Enjoy increased capital growth and returns
If you were wondering, gold has also been established as one of the best-performing standalone assets in the UK throughout the 21st For example, gold returns have averaged around 10% per annum since 2000, compared with just 4.1% for the FTSE 100 and 5.3% for real estate on these shores (using the house price index as a guide). Gold also allows you to bank a significant return on your initial investment when you also consider the associated tax advantages.
