Going for Gold: How to add some sparkle to your investment portfolio
A portfolio of solely traditional investments isn’t for everyone and certainly with distrust of the banking sector at an all time high and low interest rates, it might be time to see what else out there that could catch your investment eye (particularly for those with larger portfolios that require even greater overall diversification).
This month, Midland Financial Solutions’ Director & Chartered Financial Planner Kevin Edwards explains that a little bit of what you fancy can do you good…
“It’s important that any investment portfolio matches your attitude to risk and that you have a well-diversified set of assets. However, this doesn’t mean that you can’t have a slice of your portfolio that is more unusual or ‘racy’ – for example, by making an investment in Gold.
The precious metal Gold certainly falls into the ‘higher risk, higher potential reward’ category as the price can be quite volatile, however, if you ensure that your portfolio consists of no more than say 5% of this type of investment, it can be very beneficial.
“Gold’s investment performance tends not to be correlated to the major asset classes such as equities and this means that when equity markets are volatile, Gold tends to be more attractive. Historically, Gold has often performed differently to other investments in difficult times, which can be seen in the rise in the value of Gold over the last few years,” Kevin advises.
“Gold can be more attractive if there are concerns about possible Sovereign Debt Defaults, which is when the possibility exists that a country such as Ireland, Greece or Portugal could default on their debt. Gold also offers good investment prospects at times of geopolitical risk, like the current events in Egypt, Libya and Syria or if there are concerns that global inflation may rise faster than expected”.
“If you are looking at buying into the Gold market, I would suggest it is viewed as a medium to long-term investment, forming only a small part of your overall portfolio. Despite Gold commanding near record high prices, it is still a viable option and something that I recommend to many clients as part of a well-diversified portfolio.”
“Whatever you are considering, always seek advice from a qualified professional – mistakes can cost you dearly!”