Bullion vs. Shares: What to Invest in 2016
After five years of rallying, the beginning of 2016 was regarded as one of the worst performances of the stock market. Then recently, investors have begun to pull money from global stock funds at a faster rate since 2011. This raises the question: Is this a good time to invest in stocks? Unfortunately, there is no correct answer. This is because it is rather difficult to make an accurate prediction which direction the stock market will go in the future. Historically, stock market is always on the rise. This suggests that it will be useful to look at long-term investments.
Generally, investors who are patient have been rewarded with positive long-term returns. Investors are likely to invest primarily in mutual funds, representing different types of assets such as international stocks, bonds, or large growth stocks. These diversified assets reduce the risks and effects of changes in the stock market in the long-term. Investing in bullion is another lucrative option an investor can take to reduce risks and diversify assets. Bullion represents quantities of precious metal, like gold, silver, platinum or palladium, which are typically measured by weight and cast as bars. Investing in bullion or shares has its own merits.
Shares
Stocks are also known as equities or securities. Stocks are equities because they are an investment representing part ownership in a corporation. This entitles the owner of the stock to a share of that corporation’s earnings and assets. How the company performs will dictate the value of the stock. If the company performs well, then the value of the stock will also increase. Thus, investing in stocks can be a tricky business; an investor must be able to accurately evaluate how a company will perform. A good choice can mean profit, just as a bad choice can lead to loss.
Bullion
Gold and other precious metals have been used as a store of value dating back to ancient times. The advantage of keeping bullion compared to paper or digital stock certificates is that gold is tangible and fungible. Gold is often considered as the ultimate hedge fund, worth holding on to because it is universally acceptable, a universal finite currency. Buying or investing in gold is a way to ensure that wealth can be passed from one generation to the next. The simple goal of acquiring bullion is to buy when prices are low and to sell when prices are high.
However, the stock market is never simple or easy to predict. While the performance of the stock market greatly varies depending on market conditions, it is a good investment vehicle. The value of a stock depends on its growth from an anticipated increase in price plus dividends. Stocks often perform best in stable governments and thriving economies. Bullion, on the other hand, is also a good investment being generally considered as a store of value. While the price of precious metals is stable over time, it does not have a stock’s ability to appreciate in value in the long run.
