Investing in bullion is a great way to diversify your portfolio whether it is gold or silver bars, ingots or coins. The truth is precious metals hold far more intrinsic value than fiat currencies and they can be your lifesaver in times of crises. But such investments are far more crucial if you are planning to save funds for your retirement. Bullion can be acquired through exchange traded funds or silver and gold mutual funds.
A retirement portfolio should always contain precious metals of some sort. Here are 5 reasons why bullion is ideal for your retirement fund.
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It Maintains its Value
Bullion gold or silver has been shown to maintain their value over a prescribed period of time. This is mainly due to the fact that paper currency has no intrinsic value and that the physical metal has value in terms of industrial applications.
Furthermore, these assets are scarce. Gold and silver are tangible, meaning you hold the actual physical metal as an asset and the price of such assets won’t come crashing down.
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Hedge against Inflation
Inflation refers to the increase in the costs of living. Throughout history, gold and silver were used as money, but in modern times, it is no longer used as money. Nevertheless, gold or silver bullion is a good choice for a retirement fund because it tends to protect you from inflation.
For example, if the buying power of the Australian dollar declines, the price of silver or gold will either increase or remain unaffected.
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Diversified Portfolio
The key to a well-balanced and successful retirement fund will always include precious metals like gold or silver bullion. What happens when you diversify your portfolio? It lowers and spreads the associated risks and decreases the volatility of the portfolio. This is achieved by investing in an asset that has a negative correlation with another asset, such as gold bullion.
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Protection in Times of Crises
Silver and gold bullion are often known as crises commodities due to their innate ability to protect your retirement fund during times of crises like political instability, war, natural disaster, etc. Moreover, they can be liquefied fairly easily and hence, you can sell them for fiat currencies in emergency situations.
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Easy Storage
Whether you opt to invest in gold or silver coins or bars, generally speaking, bullion is much easier to store and carry around. You can keep them in a security deposit box in your home or vault, but that might not be everyone’s choice due to the inherent risks involved. It’s much better to keep them in a professional vault.
Although bullion should be a part of any retirement fund, it shouldn’t be considered as a means to become rich quickly nor should it be seen as a short-term investment. Instead, they should be regarded as a long-term investment and a key for wealth preservation.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin