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Is Gold better for your Portfolio than Real Estate?
In reality, gold has a mixed record. Nor should you be surprised about that. A few industrial uses, and jewelry, aside, gold is valuable only insofar as other investors think it is valuable. By itself it isn’t necessarily worth anything. Nor does it generate interest or dividends. If the price doesn’t rise, you don’t get anything. In truth, while gold may have a role in protecting against inflation, there are plenty of alternatives. You should be thinking about Real estate particularly when you bear in mind that gold is already close to an all-time high. The price of real estate won’t always move exactly in line with inflation. And you might want to steer clear of the markets where there has yet to be much of a retreat from the exuberant prices of 2006 and 2007. Even so, if there is more money chasing a static amount of land and buildings, prices are going to rise and right now most areas are close to decade lows.
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2 Answers
I am not sure who asked this question, but it is one of those better answered by offering some other more relevant observations.
Any person with an investment plan will want diversified investments, the more money you have, the more risk you can take in a portfolio. Your age also has a lot to do with it. The closer one is to retirement, the more conservative the portfolio should be so that the principal which is needed for retirement income can be preserved.
For a person that has sufficient assets in less risky investments, gold can be considered. It is highly liquid and its price is readily available. I personally own no gold and would likely never invest in it. But it has a small place in a large and diversified portfolio of CD's, bonds, stocks (mutula funds), cash and government securities etc.
Real estate is a crap shoot. The investment vehicles can be complex and location based. Real estate direct ownership is illiquid and subject to various costs of ownership in the event that rental income is not received. Real estate investments need to be watched over carefully.
I would urge investors to focus on balance in any portfolio and not concentrate in any asset class such as gold or real estate. The turbulence in the markets over the last several years continue to validiate this approach. Further, weight should be given to a significant portion of a portfolio having government insurance.
Rick,
Taking into consideration current government deficit, economic indicators and bank policy, where real state & gold are to be feared, how do we balance a portfolio?
Do we count on wall street and government bonds? They all depend on above....real state, gold and more............;)
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