A question that comes up frequently is, “Should I be investing in gold? Should I actually buy gold bars, keep them in a safe at home, and treat them as a valuable asset?”
Gold has been considered valuable for thousands of years, so it’s reasonable to assume it will continue to hold some value. However, when we compare it to other assets, there are options that have historically proven to be far more rewarding.
Gold can certainly play a role in a diversified portfolio, but relying on it as a safeguard against a potential stock market collapse isn’t a strategy we’d recommend. When you look at the long-term performance of gold, real estate, and the stock market side by side, the stock market comes out significantly ahead—almost double the average annual return compared to real estate or gold.
Real estate offers additional value because of leverage; with a relatively small down payment, you can own an asset that appreciates over time. Gold, on the other hand, doesn’t offer that same advantage. While some investors find comfort in the tangibility of holding a gold bar, it’s important to remember that buying and selling physical gold often comes with a cost of around 10%. That’s a substantial haircut, even higher than many real estate commissions.
For those still interested in exposure to gold, a more efficient approach would be through a stock fund or ETF that tracks gold or silver prices. This eliminates the steep transaction costs tied to buying and selling physical gold. While we don’t necessarily recommend gold as a primary investment strategy, this route is generally the smarter way to add it to your portfolio if desired.
At the end of the day, gold can play a small role in a well-rounded portfolio, but it’s rarely the star of the show. The key is making sure your investments are working together to support your long-term goals. If you’d like help reviewing your portfolio or deciding whether gold makes sense for you, the team at Summit Wealth Group is here to guide you.