As we grow older, we start to appreciate (and maybe understand) the appealing of saving and investing, since we get to experience the actual value of money thanks to becoming more independent and how working actually is.
They are things that can, to a certain degree, protect our money from inflation, and they also work as tools towards fulfilling specific goals or dreams.
When it comes to saving, we have the most common method, which is placing money into a saving account in order to generate a fixed level of profit that is determined by the terms of service provided by the bank or organization in charge of said account.
It is the most commonly used because of its safety as well as its reliability, but in no way is it the most profitable method. But it is understandable, considering that it is as safe as it gets.
There are other ways of saving, but they might not be as reliable, and some of them can be considered forms of investment as well, since you, to some extent, risk the money you are placing in the investment to earn a (probable) profit.
Considering that, and all the many methods you can rely on when it comes to saving and investing… Is it better to rely on saving accounts, or just try out new methods? Among the many options you have, buying gold is considered a somewhat reliable form of guarding your money, but how does it work? Should it actually be considered an investment instead?
Differences Between Saving and Investing
It is important to understand the differences between the two. Someone may differ with this opinion, but between the two, none is better than the other. They both are there to fulfill specific needs, and claiming that one method is better than the other is just wrong because, in some way, they are just two aspects of the same world.
There’s this article that can help you with more detailed information about it https://www.thebalance.com/saving-money-vs-investing-money-358062, but I will briefly showcase their differences.
Saving can be described as a safe method that is used to protect your finances towards a certain goal, be it purchasing something that is too expensive to be bought immediately, or just for the sake of retiring. Regardless of its objective, saving is used to achieve something in a slow, but secure and steady way.
On the other hand, investing can be considered a risky method of protecting your money, since you might end up losing some of it along the way. But with that risk, a probably profit is also achievable. This profit can be much higher than the initial investment, but it all depends on the niche behind the said investment.
A general rule of thumb when it comes to investing is that the riskier an investment is, the more profit can be created through it. Still, this is by no means a definitive rule, since there are investments that are safe and can create a decent profit. However, it all depends.
That is why research is a very important aspect of both saving and investing, and when we talk about gold, understanding the principles behind it can help you make a decision.
The Drawbacks of a Saving Account
The reason why purchasing gold is perceived as a form of saving instead of investing is because gold barely changes its prices over time, and when it happens, it rarely stays that way for a long time.
And that is why some people, as mentioned in this article, might prefer the idea of saving by purchasing gold instead of putting their money in a bank account. The reasoning is simple.
When you put money in a bank account, although you are indeed protecting it from spending it on stuff while slowly creating a fortune, you don’t get a lot of profit from it. It is mostly considered a way to complete a goal, more than creating profit per se.
But a saving account won’t protect your money from inflation, a very common phenomenon in today’s society. Inflation can absolutely bring your money towards a bad end, and you can’t do anything about it but spend it before things get worse.
On the other hand, purchasing gold might be a solution to this problem.
The Benefits of Purchasing Gold
Although gold is a precious metal like silver, its uses in industries and the creation of specific pieces of metal are not as common. Gold is mostly perceived as a metal that can be used in jewelry and decorations, thus, it is not as affected by the law of supply and demand.
This is why its prices are not as volatile, but it can still fluctuate at times when holders decide to sell, or buyers decide to go crazy. Still, it tends to turn back to normal before you notice. If you check https://www.investopedia.com/articles/basics/08/invest-in-gold.asp, you’ll get a solid idea of what I’m talking about.
A simple way of seeing it is that although you might not get a lot of profit in comparison to other forms of investment, it can be considered a much more profitable way of saving money than a bank account, but this depends entirely on you.
How do you engage the market, how much research you do, as well as taking the right decisions, are what will ultimately decide how much you benefit from purchasing gold. The more you engage in the activity, and the more you learn along the way, the better results you will get.
Approaching the Experience
There are many ways to approach the experience. You have the option of purchasing your gold from a local, physical store or try into online platforms of trading and purchasing. Regardless of what you decide to do, it is always wise to do some research beforehand.
This is because stores tend to have their own prices and some platforms might have commissions that are higher than other platforms. GoldMoney, for example, is a famous platform you can rely on, but is GoldMoney legit? Those are the questions you will have to ask yourself before making a decision.
A good recommendation I can give is to always engage in the community. Certain communities, like the subreddit r/investing from Reddit, are a good place to start. People that are more experienced and might have really good advice for you, might be there waiting for your question.
Besides that, relying on customer reviews and reputation is another solid way to know whether a store or platform is legit. These are the best way of getting to know a product or service before hiring it or purchasing it, so take that in mind before making any decision.
Overall, always have multiple potential options at hand, and make sure to research them properly, so you can choose between the options which one is better for your current needs.