Keen on multi-asset investing via commodities? Here’s all you need to know
Jul 3, 2023, 16:12 IST
If you have been keeping up with global economic developments, you would have read about how developed economies like Germany are going through slowdowns and entering a phase of recession. You would also have caught the news on rising inflation and the stringent rate action taken by central banks to temper overheating in economies. And these cues may have prompted you to wonder about the best investment strategies in such volatile and evolving scenarios.
One strategy you should consider revolves around multi-asset investing via commodities like gold and silver. These glittering metals have the power to withstand the corrosive impact of inflation because, while rising costs erode the purchasing power of fiat currencies over time, gold and silver have intrinsic value and limited supply. Due to these reasons, the commodities have traditionally served as effective hedges against inflation; with the prices of these metals appreciating in line with inflation and helping investors maintain their purchasing power while safeguarding their hard-earned wealth.
The term multi-asset investing refers to the strategy of investing in multiple asset classes in an attempt to ensure diversification, thus enhancing returns and mitigating the underlying risk. In a high inflation-high interest rate scenario, amid a global slowdown, multi-asset investing via commodities allows you to enjoy financial security owing to the commodities’ scarcity, durability, and resistance to corrosion.
Among commodities, gold and silver have maintained their purchasing power over the long term, thus cementing their ability to add glitter to your portfolio. They have also proven their mettle as safe havens during times of economic turbulence and market volatility and investors often turn to these metals as a hedge against inflation, currency fluctuations, geopolitical tensions, and financial crises. The value of gold and silver tends to rise when traditional assets like stocks and bonds experience significant declines and this aspect makes them the pillars of an optimal multi-asset investing strategy.
Further, these metals have stood the test of time as reliable stores of value. When compared to debt and equity assets which can be subject to default and bankruptcy, precious metals have an intrinsic and enduring value that does not depend on any company’s fundamentals, making them more trustworthy in volatile situations. Additionally, investing in gold and silver has become increasingly accessible to individual investors, with the inception of various investment vehicles such as physical bullion, exchange-traded funds (ETFs), and mining stocks. These myriad investment routes help maintain the value of gold and silver in a way that physical jewellery cannot, while unlocking flexibility and liquidity and allowing investors to buy and sell their holdings with relative ease.
A multi-asset investment strategy featuring gold and silver can be a great option for you if you are keen on long-term investments and wish to gain exposure to a diversified portfolio. In addition, this strategy can also help your retirement fund stand in good stead, owing to the metals’ ability to withstand inflation and currency devaluation. Gold and silver-based multi-asset allocation funds are also optimal for risk-averse investors given the safe haven nature of these metals. In fact, in the current geopolitical and economic scenario, gold and silver investments can be considered a suitable option for every type of investor, except for ultra-short term players who may experience volatility in metal prices and face potential losses amid evolving macroeconomic triggers.
While gold and silver jewellery has captured the attention of individuals since time immemorial, investing in these metals is a different ball game altogether. The value of jewellery tends to depreciate over time, in addition to the amount wasted on making charges. Therefore, as an investor, your best options include gold and silver ETFs, and multi-asset allocation funds investing in gold and silver. With multi-asset allocation funds, you can enjoy exposure to equity, debt and commodities along with the added benefits of expert fund management and a staggered and disciplined investment approach via systematic investment plans, which allow you to start investing with as little as ₹500.
Disclaimer: The article is authored by Mahantesh B Saunshimath,Mutual Fund Distributor. The opinions expressed are those of the author and do not necessarily reflect the views of Business Insider India. Do your own research (DYOR) before deciding to invest in any financial asset class.
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One strategy you should consider revolves around multi-asset investing via commodities like gold and silver. These glittering metals have the power to withstand the corrosive impact of inflation because, while rising costs erode the purchasing power of fiat currencies over time, gold and silver have intrinsic value and limited supply. Due to these reasons, the commodities have traditionally served as effective hedges against inflation; with the prices of these metals appreciating in line with inflation and helping investors maintain their purchasing power while safeguarding their hard-earned wealth.
Multi-asset investing via commodities
The term multi-asset investing refers to the strategy of investing in multiple asset classes in an attempt to ensure diversification, thus enhancing returns and mitigating the underlying risk. In a high inflation-high interest rate scenario, amid a global slowdown, multi-asset investing via commodities allows you to enjoy financial security owing to the commodities’ scarcity, durability, and resistance to corrosion.
Why gold and silver?
Among commodities, gold and silver have maintained their purchasing power over the long term, thus cementing their ability to add glitter to your portfolio. They have also proven their mettle as safe havens during times of economic turbulence and market volatility and investors often turn to these metals as a hedge against inflation, currency fluctuations, geopolitical tensions, and financial crises. The value of gold and silver tends to rise when traditional assets like stocks and bonds experience significant declines and this aspect makes them the pillars of an optimal multi-asset investing strategy.
Further, these metals have stood the test of time as reliable stores of value. When compared to debt and equity assets which can be subject to default and bankruptcy, precious metals have an intrinsic and enduring value that does not depend on any company’s fundamentals, making them more trustworthy in volatile situations. Additionally, investing in gold and silver has become increasingly accessible to individual investors, with the inception of various investment vehicles such as physical bullion, exchange-traded funds (ETFs), and mining stocks. These myriad investment routes help maintain the value of gold and silver in a way that physical jewellery cannot, while unlocking flexibility and liquidity and allowing investors to buy and sell their holdings with relative ease.
Should you invest?
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How should you invest?
While gold and silver jewellery has captured the attention of individuals since time immemorial, investing in these metals is a different ball game altogether. The value of jewellery tends to depreciate over time, in addition to the amount wasted on making charges. Therefore, as an investor, your best options include gold and silver ETFs, and multi-asset allocation funds investing in gold and silver. With multi-asset allocation funds, you can enjoy exposure to equity, debt and commodities along with the added benefits of expert fund management and a staggered and disciplined investment approach via systematic investment plans, which allow you to start investing with as little as ₹500.
Disclaimer: The article is authored by Mahantesh B Saunshimath,Mutual Fund Distributor. The opinions expressed are those of the author and do not necessarily reflect the views of Business Insider India. Do your own research (DYOR) before deciding to invest in any financial asset class.