What does it mean to invest? Posted by James Randolph on September 20, 2011
Gold VS Traditional Investments
What does it mean to invest?
Very simply defined, it is the act of contributing money, time, or energy into a worthwhile entity where you feel positive that your contribution will be multiplied or advantageous to you.
In this article, I will explain the benefits of traditional monetary investments, but I will set one apart which possesses exclusive merits.
- Stocks – Shares in a company. There are two types of stocks: common and preferred. You are part- owner of a company when you invest in a company’s stock or buy its shares. Different stocks fluctuate more than others, but it is this high risk that can bring high returns in the long run. Stocks normally outperform other traditional paper investments.
- Bonds – As an economic boost, government and corporate entities can sell bonds. Purchasing a bond means lending money for the promise of reimbursement along with a stipulated annual return.
- Property – Property investments include apartment buildings and houses and are used to produce ongoing rental income. These properties should also generate capital gains as property values accumulate over time.
- Mutual Funds – Mutual funds are an investment where a group of investors pool their money and hire a portfolio manager. The manager invests this money in stocks, bonds and/or other investment securities. The fund manager then continues to buy and sell stocks and securities according to the style set by the fund’s plan.
The Classis Investment
Gold is admired and revered throughout the world for its value and rich history which has been entwined into cultures for hundreds of centuries. It was around 800 B.C. that coins containing gold appeared and, since then, people have continued to possess gold for many reasons.
Value consistency – Unlike paper currency or other assets, gold has maintained its value throughout the ages. People see gold as a way to pass on and safeguard their wealth for generations to come.
Devalued dollar – The U.S. dollar is the world’s reserve currency, but as we know this will most
likely change due to an unstable economy which has prompted people to flock to the security of gold.
Inflation/Deflation – Gold has historically been an excellent hedge against inflation because as the cost of living increases, so does the value of gold. During the 1930’s, gold’s value rocketed while businesses slowed and the economy was in tremendous debt. Today we are seeing this same pattern.
Supply/Demand – Since the 1990s the gold supply has come from sales of gold bullion from the vaults of global central banks. Global central banks showed slower buying potential in 2008 and new mines can take up to 10 years to begin producing. Normally, a reduction in the supply of gold increases gold prices.
Gold is frequently referred to as the ‘crisis commodity’ because people feel secure investing in it when tensions are high throughout the world. It is probably one of the best investments in any diversified portfolio.
Senior Staff Writer – Certified Gold Exchange