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How to Save For The Long Term: Cash vs. Gold

How to Save For The Long Term: Cash vs. Gold

Saving money in the bank might sound like a good idea. Your money will earn interest which is better than keeping it in some coffee tin or under your mattress. Using your money to invest in stocks and precious metals can help you build a sizable nest egg. Saving money should never simply mean putting cash away, having gold jewellery can also be a form of savings and you can convert it into cash when you need to by visiting your local gold buyers. Gold not only functions as currency but it is a tangible asset you can trade.  Here are some compelling reasons why it is a good idea to buy gold as an investment, instead of holding on to cash:

1. Gold Isn’t Affected by Declining Interest Rates

The recent interest rate you can earn on a savings account is just around 0.07%. The interest rate of stocks and bonds is a measly 0.36%. Those aren’t impressive rates. In contracts, the interest that can be earned on gold has gone up 25% in the last 12 months. This is the best they have been in the last decade.

The famous billionaire hedge fund investor, Ray Dalio has been quoted as saying that “cash was trash”.  When you consider how currencies can lose their value, this makes sense. Ask anyone who still has stacks of the Iranian Rial, or the Venezuelan Bolivar or the Zimbabwean dollar. Those currencies are not worth the paper they are printed on. Dalio like many savvy investors advise a diverse portfolio with at least 5 to 10 percent invested in gold.

2. Gold Can Do Better Than Stocks and Bonds

You can put cash in stocks and bonds instead of saving it in a bank or buying precious metals. In 2020, gold price outperformed U.S Stocks and bonds managing to gain as much as 9.2% in 12 months. No investment class has come as close to gold especially in the last couple of months. Gold is a great investment option when you are looking at the long term.

3. Gold is a Global Currency

Everybody knows that gold is valuable and that it is revered in most countries across the world.  Gold has held on to its valuable status for centuries.  Gold also happens to be durable and its beauty always makes it desirable and makes it worth having.  It is superior to other forms of monetary currencies. It’s not backed by any government and it is valued on its own worth.  Some experts regard owning gold as having an insurance policy because gold can survive the worst of times.

4. Gold as a Hedge in Times of Inflation

What is inflation: It’s the measure of the rising cost of services and goods that in turn can affect the value of your paper currency including the cash you have saved up in your savings account. When inflation is high, paper currency has little purchasing power. On the flip side, low inflation suggests a dramatic collapse in the price of services and goods. It could cause spending to decline and indirectly cause deflation and a recession. Inflation/ Deflation do not affect the gold price the same way. Gold does not carry the default risks. In fact, gold thrives in high inflation. If you are wondering what the best thing to do with your money is, then your answer is gold.

5. Conclusion

The reason many eastern cultures own so much gold jewellery is that it’s considered a form of savings. Not only is it a form of savings, It can also be worn on special occasions or as fashion. This is putting your gold to good use while the price goes up over time. Many people in countries such as India regularly visit their local gold buyers to sell some old jewellery in exchange for newer fashionable gold.