Why Stock Investors Should Consider Gold Now

SEATTLE (Scrap Monster): Most investors, especially those that are just starting out, tend to focus on two main asset classes – stocks and bonds. While both of those form a big part of most balanced portfolios, there are many other assets to consider when putting together your investment strategy. 

Gold is an investment that some people might not even think about, but it can serve a number of important purposes. There are a few reasons why right now is an especially good time for investors who may have shied away from anything other than stocks and bonds to consider gold.

Why stock investors should consider gold now

Here are a few of the reasons stock investors might want to look to the gold market right now:

Gold hedges against inflation

Though inflation was steady in September 2023, it is still at 3.7%, which is higher than the 2% the Federal Reserve has been targeting. This means that if you're investments aren't earning at least 3.7%, you're actually losing purchasing power. 

Gold, on the other hand, is generally thought to retain its value. This means that if some of your investments don't beat inflation, you're protected by your gold investments.

Gold diversifies your portfolio

One of the most basic rules of investing is to have a diverse portfolio. Within the world of stock investing, this means not putting all of your investments into one company, industry or sector. 

Diversification also means having investments in different asset classes, though. If stocks make up your entire portfolio, you could be in for a world of hurt if the entire market takes a bad dip. Investing in gold gives you a cushion and protects at least some of your assets from any world-shaking events on Wall Street

Gold protects from external factors

It's no secret that there is a lot going on right now. Major wars are being fought in Europe and in the Middle East, the COVID-19 pandemic is still impacting some industries and there is a contentious U.S. presidential election that is just getting started. 

All of these could lead to instability in the markets, which can lead to stock investors losing money. If some of your money is in gold, it will protect you against the chaos that could be caused by geopolitical events far outside of your control.

Courtesy: www.cbsnews.com