Most wealth management experts agree that a diversified portfolio is the best approach to safeguarding your money. Reliable investments should include a combination of “paper or soft” assets like stocks, bonds, and non-tangible instruments and “hard investments” like real estate or gold. Is real estate or gold investment better in the current market conditions? Oxford Gold Group’s financial experts explore the options below.
Many people focus on “intangible” investments as a primary source of wealth accumulation. These investors watch the market, buy, sell, and keep an eye on emerging investment vehicles. However, intangible assets can be highly volatile, and something that seemed like a solid decision a month before can turn into a disaster overnight as world markets adapt to events.
It’s risky, especially compared to more tangible assets, like gold and real estate property. Investors who want to minimize their portfolio’s overall risk use these tangible assets to balance the scales. There are also many other benefits that we investigate below, including how real estate compares to valuable gold investments.
A diversified portfolio makes wealth management more rewarding and balances the risks between each asset category. Many investors mistake the financial advice to diversify to mean “different types of stocks,” but if those stocks tie all your wealth to the same market forces, one crash will erode years of hard work. Different types of assets work far better to spread the returns and risks of valuable assets.
Equity, private equity, real estate, and commodities like gold are all standard investment vehicles. These different types of assets balance the risk of your portfolio and protect its worth, even if one type of asset goes through a bad patch. The right investment choices consider many factors beyond the performance of stocks or tangible assets, including:
The most popular hard investments to diversify a portfolio remain gold and real estate. However, only one of these is flexible enough to offer long-term wealth management stability.
Both real estate and gold fall are tangible assets. However, these two types of assets are not equal in their security, profitability, or risk factors.
The worldwide economic recession in 2008 taught wealth seekers a lot about real estate investment risks. Before the subprime crisis, the real estate market was booming. When the bubble burst, it devastated many people who had pinned all their hopes on the permanency of real estate value.
Property is still a worthy investment within a diversified portfolio. However, if investors choose this avenue, they should prepare to “park the investment” for at least ten years before realizing significant returns. It might be possible to “flip” a property before that for an excellent profit, but this is a largely saturated market.
Real estate does come with some volatility since there are lots of moving parts involved in creating and maintaining property value. It is also an asset that needs continual care to safeguard its worth, so a real estate owner needs to be highly motivated. Other factors also come into play with real estate value, despite the work an investor puts into curating the asset.
The value of a real estate investment is beyond the control of the investor in terms of:
How long can you tie up your cash? Liquidating real estate is a problem if you need to access your investment in cash form quickly. It could take months or even years before you see the cash value of your real estate, and you cannot sell off “part” of the investment, either.
Investors realize the real profit from a property investment upon selling it. Most investors fetch a 9% to 15% return on the initial investment. However, this amount could take years to appear in a bank account from the beginning of the sales process. Real estate is also an all-or-nothing type of liquidation—selling it is complex, and investors should prepare to go through a lengthy process with plenty of administrative components that delay accessing the cash flow you need.
Fortunately, there are some unique benefits of investing in real estate that might mitigate the cash flow issues, including:
While real estate will provide diversification from paper investments, investors should take their lessons from history. In 2008, stocks and the real estate market tanked simultaneously, and the global dynamics have not fully recovered over a decade later. If you want to access cash fast in the future, real estate is not the best option.
As a commodity, gold is the other highly favored tangible investment for investors worldwide. Let’s compare gold’s risks to real estate similarities for a clearer picture of why the metal has taken the lead in portfolio diversification, even for first-time investors:
Liquidation is easy with gold. If you need to liquefy the asset, you can sell it for cash without a complex process or a long waiting period. Gold is personal property, and owners can sell it as they wish without delays.
Gold is “global money.” It has a universal value everywhere. From 1971 to today, gold has enjoyed a massive 2,800% increase in value, and it continues to follow this trend. While it does see adjustment periods, many investment experts predict that gold will increase its value exponentially over the next 15 years.
Gold does not rely on banks or exchanges like paper investments. Throughout history, gold has been one of the most sought-after commodities, including during times of global strife like the COVID 19 pandemic. Its value holds as a stand-alone investment, with gold’s value climbing and often surpassing the value of other investments by leaps and bounds long-term.
Gold investments have enjoyed a bull market since 2015, with the trend set to continue into the next decade. Some experts predict that gold will reach its peak at over $8,000 an ounce by 2025, so now is an excellent time to be investing in this commodity. Prices will continue to climb, and buying gold right now is the best way to ensure that you can start building wealth without being priced out of the market.
If you are searching for a vehicle that comes with an element of safety, gold is much more attractive than real estate. It offers flexible liquidity and a tangible asset you can pass down through the generations to build family wealth. It also makes investments easier to handle in increments if you want to buy or sell only as much as you can afford.
The world economy is uncertain, but gold has stood the test of time. Why not take advantage of gold investing to diversify your portfolio and watch it grow with the Oxford Gold Group? The financial experts at Oxford Gold Group can help you invest in gold for a brighter tomorrow—place your order with us today.
INSIDE THIS INVESTMENT GUIDE YOU WILL LEARN:
• How Gold & Silver can protect your savings & retirement accounts
• Types of Gold & Silver products available for Home Delivery
• How a Gold & Silver IRA can protect your Retirement account