Gold has always been a byword for wealth. It also has something of a reputation for being a relatively safe bet. But does the metal stand up to other forms of investment?
How does gold look as an investment opportunity when examined next to stocks? Here, we weigh up the benefits that come with investing in stocks and gold to see which is the better option. Read on to find out more.
The rise of investing
Before we compare gold and stocks, it’s worth noting investing’s surge in popularity. Online trading platforms have made investing in stocks, commodities and other assets more accessible than ever. Many people who might never have considered trading before can access their account on the go and this is largely down to the markets being accessed on mobile devices.
However, while investing is something that’s no longer seen as something that’s just for the rich, it can be difficult to know where to invest. Making any type of investment comes with an element of risk, so it’s worth weighing up your options if you’re trying to decide between gold and stocks.
The benefits of investing in stocks
According to Finder.com, 33% of Brits own shares and two-thirds (67%) say they’ll buy stocks and shares in the future. This reveals an appetite for trying their hand in the markets.
There are certain advantages that come with investing in stocks. These include:
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Dividend benefits
Investors in stocks will receive dividends from the company they invest in. Dividends are paid even if stock has lost its value and these payments can help investors to grow their portfolio or use the money for personal reasons.
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Diversification
It’s possible to diversify an investment portfolio by investing in stocks. Further diversification is also possible by investing in different stocks across a selection of industries and sectors. This allows investors to follow the fortunes of their stocks over a period of time and take a position when they’re ready.
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Liquidity
Stocks are considered to be liquid assets because they can be converted to cash in the form of several buyers relatively easily. However, some stocks are more liquid than others, so it’s important to be aware of this before investing.
The benefits of investing in gold
Gold as been in enduring investment. Even in the UK, we’re tapping directly into gold sources, with work underway at Scotland’s only gold mine. Some of the benefits of investing in gold include:
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Hedge against economic difficulties
Gold doesn’t behave like other commodities and assets. When stocks fall, the metal maintains its value, making it attractive to investors.
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Portfolio predictions
Gold is seen as a ‘safe haven’ for many investors. This is largely because its less risky than other investments and there’s a chance of higher returns. It’s also possible to make gold price predictions as far ahead as the next five years because we can see how it can perform based on past performance.
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Diversification
Like stocks, gold can help to diversify a portfolio. However, unlike stocks which are affected by factors like the economy and geopolitical concerns, gold can be bought and sold in a range of economic conditions.
Ultimately, there’s an element of risk that comes with both stocks and gold. While both have their plus-points, the decision comes down to the investor.
