Tuesday, May 22, 2012

Is Gold Really a Legitimate Investment?

I'm sure you've seen all of the commercials touting gold as the best investment ever. After hearing so much about gold, you're probably wondering whether it makes a legitimate investment or not. The simple answer is yes, but only as part of a balanced and diversified investment portfolio.

For many investors, it's hard to take gold seriously because of all the commercials that are targeting the elderly and using fear of banks, economies and politicians to try to sell you their gold. These commercials are definitely misleading and do not typically offer any real help on how to invest in gold.
However, there are legitimate reasons to invest in gold.

These reasons include diversification, as a hedge against inflation, and as a way to protect oneself from stock market crashes. Indeed, adding some gold or other precious metals to your portfolio can often lower total risk without sacrificing expected returns.

With that said, don't buy gold out of fear or speculation. Both of those reasons are based on emotion and emotion is not a quality that good investors exhibit when making their investment decisions.

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