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FINANCIAL PLANNING
GOLD
There are a few reasons people buy gold
as an investment. First, to hedge against inflation. Based on the runaway inflation from the last year, the news media is all over gold
as a great investment to make at the moment. Another common reason to invest in gold is geopolitical uncertainty. Many people believe that in the case of geopolitcal disaster, they can trade their gold for goods and services
if necessary. Another reason for investment
in gold is to hedge against the U.S. dollar. When the value of the U.S. dollar falls against other currencies, people tend to flock to gold. There are a couple of ways to purchase gold. Someone could buy physcial gold in the form of coins, bullion, or jewlery, or they could invest in a gold exchange-traded fund. To be totally transparent, we at Peterson Wealth Services don’t really like the idea of investing in gold. I always advise against making an investment based on fear, and that is usally
the case with gold. I also see gold having a potential performance lag over time. Gold can outperform during a certain time period, just like anything else, but if someone is trying to invest for retirement, gold could put a ceiling on investment returns. The chart provided below illustrates the performance of the
S&P 500 and gold dating back to 2007. As shown, both investments did well. Gold could potentially fit into a portfolio but shouldn’t be expected to compete with the stock market.
CRYPTOCURRENCY
As a recent craze taking over, cryptocurrency has left many people wondering if it is the up and coming way
to become wealthy. Bitcoin is common knowledge now because it has become so popular even though it has proven to be incredibly volatile. The younger generation is leading the charge on digital currencies, and many believe it is the best way to get rich. However, there have been several cases where certain digital currencies have gone all the way to zero. I like to reflect on the dotcom bubble and compare this new age to that period of time because it is so similar.
There were thousands of companies and
the majority of them ended up failing. It
is important to do research on investments and when looking into cryptocurrency, you’ll find no earnings, no business plan, and no regulation. In my opinion, it’s all speculation. It’s like trading baseball cards. Each card is only worth as much as the next person is willing to pay for it. There have been talks by the Securities and Exchange Commission to implement regulations on crypto exchanges in order to offer similar protection as other forms of investments. Until then, it’s a very risky place to invest money and I would advise looking in different places for a long-term strategy.
Regardless of financial status, occupation, and beliefs, no one has a crystal ball when it comes to the investment world. It’s impossible to outsmart the market and buy or sell at
all the right times. The proven strategy to successful investing isn’t all that glamorous. It does not involve the constant search of the next greatest thing. It’s a slow process that involves a financial plan and not allowing the news media to dictate major decisions. As I mentioned in my story, you don’t need to do too much. Most of the time, keeping it simple can pay off in the long run.
Regardless of financial status, occupation, and beliefs, no one has a crystal ball when it comes to the investment world.
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