For centuries, gold has been the preferred way of accumulating and securing wealth—and with good reason. Unlike other investment instruments, gold is a relatively low-risk investment option, as it predictably appreciates in value over time.
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Everything in life contains an element of risk, but if you are concerned about investment safety, some opportunities are considered less risky than others. The concept of safe investments covers more than just some specific investment types; it also takes into account how assets are allocated within a portfolio and the factors that influence them. If you are wondering where to buy gold or how to buy gold in Australia as a safe investment, check out the Rush Gold app.
What are some safer investment options?
Bank accounts, high-interest savings accounts, and term deposits are considered safe investment options. Fixed interest investments, including government bonds, corporate bonds, debentures, and capital notes, can also be considered safe investments. For centuries, people have used gold as a kind of currency because they believe it will always be valuable in the future. Gold investing may provide systemic risk protection and carries zero credit risk, making it one of the safest investments. Owning physical gold means that you are a direct owner of gold bullion and that ownership is protected by property rights laws. These types of investments are considered safe, especially compared to some higher-risk investment options such as shares or ETFs.
Often, investments that are considered safe are defensive. Despite being less likely to yield high returns, they tend to be more stable. These types of investments are used to meet short-term financial goals or diversify a portfolio. A diverse portfolio contains different types of assets such as equities, bonds, and gold.
Diversification of an investment portfolio may spread risk, as different investments will behave differently in various situations. If an investment portfolio only contains shares, the stocks may all be subject to the same factors linked to the Australian economy and likely to behave in the same way. Another example is commodities. Whilst most commodities follow the equities market and fall when the market falls, gold tends to act oppositely, thereby helping to compensate for the market’s decline. Another benefit of a diversified portfolio is that they tend to bring in higher returns and exhibit better performance over the long term.
Do safe investments also provide good returns?
Having a defensive investment strategy may minimise risk, and minimising risk can be as important as getting higher returns when managing wealth. One of the best SMSF investments may be to adopt a defensive investment strategy with safe investments since it will preserve capital and at the same time see some growth. While this growth may not be as large as high-risk stocks, the risk of losing capital may be lessened than it is with high-risk stocks.
In building an investment portfolio, diversification means a mix of investments, not just the safest ones. A diversified portfolio can contain investments that yield a dividend, those that bring in a steady rate of interest or have fixed interest rates available upon maturity, those that are more aggressive growth stocks that may offer higher returns, and those that may hedge against inflation such as gold. In fact, in the 1970s, due to a large-scale inflationary episode, the price of gold rose more than 2000%, so sometimes what is considered a steady, safe investment may surprise us. Diversifying a portfolio may mean less risk as it is spread across different types of investments. While one may be falling, another may rise and, as mentioned, possibly create higher returns.
What factors should I consider before investing?
If concerned about safe investments, there are a number of factors an investor should consider. One factor is jurisdiction selection, which considers whether a country is a safe place where wealth is protected. Australia is a country with one of the highest International Property Rights Index scores in the world and, therefore, probably a safe place to invest. This is because governments, such as the Australian government, with sound finances and prospects, are less likely to appropriate the wealth of individual citizens. Furthermore, gold is one of Australia’s top income earners.
Another factor to consider is how the investment works. With Rush Gold, there is no middle person. Our customers buy gold, so they own physical gold bullion outright. This means that there is no fund or ETF, for example, in between the investor and their gold, and thus there may be a much lower chance of systemic risk as funds and ETFs may be subject to additional risks triggered by economic or other events.
When considering investing, it’s also important to consider how to keep on top of fluctuations in the market prices and how to be able to buy and sell various types of investments easily. Rush Gold makes it easy for you to keep up to date with the gold market and check the gold price in AUD and other currencies with our app. We also keep your gold liquid and enable you to buy gold and sell gold quickly and easily online.
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