Advantages and Disadvantages Of Investing In Gold

Advantages and Disadvantages Of Investing In

Gold is a precious metal that is quite attractive to many people. How come? With an attractive shape, this one piece of jewelry has managed to attract the attention of many people because it is known as an investment item with certainty that it will provide benefits for its owners.

It is not surprising, because gold investment has the main advantage in which the price tends to increase from year to year. This clearly provides benefits for the owners, especially if the difference between the purchase price and the selling price is quite large.

It is an open secret when people use gold as a form of investment to reap rewards in the future. Various forms of gold are in great demand, such as the form of gold jewelry, gold dinar, in the form of bars, as well as gold savings which function to fund education, health costs, and even buy a house.

Advantages And Disadvantages Of Investing In Gold

Check out the following reviews regarding the advantages and disadvantages of investing in gold that you need to know.

Advantages of Investing In Gold

1. It is Easily Cash

This is the first advantage that is quite tempting in investing because other forms and types of investment tend to be more difficult to cash in or can only be claimed at certain times.

In contrast to the case of gold investment, which provides flexibility for these investment holders to be able to withdraw it into cash in a relatively easy way and in a relatively short time and is more flexible than other types of investment.

2. Free Tax

It is different from owning shares in a particular company. The benefits obtained from a good investment in a company are not immediately enjoyed by the shareholders of the company.

The reason is, getting this benefit is sometimes accompanied by taxes, or sometimes the form of this benefit is not in the form of cash but additional company shares. Having gold as an investment item is a right choice if you want a tax free investment.

3. Protecting the Value of Wealth

With the tendency of its value to increase from year to year, gold is very suitable to be called the investment that is most capable of protecting the value of one’s wealth.

Protection of gold investment against one’s wealth can be reflected in the price which is always stable and tends to increase so that when it is sold back, gold investment holders tend to get a higher return.

Another advantage of investing in gold is that you do not have to do it in large quantities, such as buying it in the form of jewelry. To be sure, this investment has a myriad of other advantages with lucrative profits. So it is not surprising that now there are many gold shops popping up to attract the interest of the public to those who live in the middle to lower economic level, namely by selling a type of young gold which is quite affordable compared to old gold.

Even so, every type of investment is not perfect. Behind the advantages and benefits that exist in investing in gold, there are still some disadvantages that many people may not know or rarely know. One of them is the risk of fraud under the guise of investing in gold by irresponsible parties who dare to give a big company name and provide vigorous promotions to attract potential investors who are also potential victims of fraud.

Disadvantages Of Investing In Gold

1. The Risk of Loss is High Enough

This is the first risk that gold investors must face, especially those who make gold in the form of everyday jewelry. This risk arises from a robbery that may occur, especially if the jewelry used is large or flashy.

Investing in gold in the form of a large amount of bullion is also prone to this risk. So to protect their assets, gold investment holders are usually willing to pay more funds to rent a safe deposit box, which is a bank facility for storing files and belongings of customers who are considered to have a high enough value.

With profits that are considered high enough, this investment is also not free from risks that are not low either. It is necessary to further consider this investment if you are not sure about the surroundings that pose a threat to your investment.

2. The Price is Fluctuating

Although the trend in gold prices always increases, the increase does not happen every day and is not an event that takes a little time. It is said to have an increasing trend in gold prices because the review was carried out within several years.

Gold also sometimes experiences a decrease in selling price, although it often increases. The frequent changes in gold prices have the potential to make it difficult for gold investors to be able to calculate the value of the gold investment that we have in the future.

Maybe some investors will take the mean of a fluctuation in the price of gold per gram to calculate the future value of their investment at a certain interest rate. This may not have much effect on investors with not too fantastic gold investments, but it will be quite a heavy consideration due to the fluctuating price for investors with a large amount of gold investment. So if you plan to have a large amount of gold investment, consider the fluctuation of the gold price.

3. Very Little Impact on the Real Economy

Having gold investment cannot make a positive contribution to economic growth in real terms. This is due to the fact that the profits owned tend to be used for the personal interests of investors, although some gold investors use these investment profits for spending needs in which spending or consumption is also an indicator of economic growth.

It is different if an investor has an investment in company shares. The profit obtained is the root of the company’s profits, where this profit will be reused by the company as an investment again or used to finance the running of the company’s wheels to be able to produce more and better products.

4. Is a Long Term Investment

Clear. Gold investment is not a suitable alternative for investors who want quick profits. Fairly large fluctuations in the price of gold cannot guarantee that investors will get large profits in a short time. As previously mentioned, the tendency of the gold price to rise is a long process, meaning that it cannot be done in a short time to benefit from the difference between the buying price and the high selling price.

When people are in a good financial condition, other investments that promise higher returns in a shorter time, such as investing in corporate stocks, look more attractive and promising. In the end, gold investment began to be abandoned.

5. The Price Tends To Slow Down When Economic Conditions Are Stable

This is both fact and irony. The price of gold tends to increase when economic conditions are unstable. It could be that during this time there is inflation which causes an increase and also a decrease in the price of gold.

If inflation occurs much higher than the public estimate, it is possible that the gold price will be much higher. Vice versa. Stable economic conditions will encourage people to consume appropriately. If there is an unstable economic condition, gold is used as the safest alternative to secure investor wealth.

Anticipate Losses That Appear

Studying further what are the weaknesses of the investment you will choose, will prevent you from losses that may arise due to mismanagement of investment funds.

By knowing what are the advantages and disadvantages that will be caused, can help you anticipate possible losses that may arise. So, are you interested in investing in gold?

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