INVESTMENT.RAKCER.ID – Advantages and disadvantages gold investment, one of the safest investment options for beginners is gold investment.
But is that true? Keep reading this article until the end if you’re interested in this type of investment.
One type of investment often described as “the easiest” and widely favored by many people is gold. One of the main reasons is that it is considered safer for those who want to start investing with relatively low risk.
In addition, gold price movements tend to increase based on historical data.
Generally, gold prices have risen from year to year, although there are times when prices experience stagnation.
However, before deciding to choose gold as an investment instrument, here is a detailed explanation of its advantages and disadvantages, along with tips for investing in gold.
Why Choose Gold Investment?
As of 2024, gold has continued to show strong performance amid high inflation and interest rates. Many investors tend to buy gold (and other metals) when they are concerned about other assets or broader economic conditions.
Moreover, recessions in recent years have heightened these concerns. Meanwhile, gold has long been recognized as a stable and profitable investment instrument.
To make gold investment more accessible, installment schemes are now available, allowing investors to purchase gold despite its high price.
Advantages
1. Long-Term Price Stability
Gold tends to increase in value over the long term, even during periods of economic turmoil. According to Bank Muamalat and data from the World Gold Council, gold prices have increased by an average of 11% per year over the past 20 years.
2. Hedge Against Inflation
Inflation can cause the prices of goods and services to rise. Although inflation also affects gold, higher inflation rates usually push gold prices even higher.
This is why many people prefer investing in or holding assets in the form of gold. When inflation occurs, gold tends to gain value, while cash loses its purchasing power.
3. Easily Convertible to Cash
According to the Financial Services Authority (OJK), gold can be sold or pawned through pawnshops or gold stores, making it relatively easy to convert into cash.
This convenience is not available in many capital market investment products, which can only be sold during trading hours and require time for fund liquidation.
Disadvantages
1. Does Not Generate Passive Income
Profits from gold investment can only be realized when the gold is sold. Unlike capital market investments such as stocks, gold does not generate passive income like annual dividends.
2. Less Suitable for Short-Term Investment
Although its value is relatively stable, gold tends to experience slow price growth. This makes it less suitable for short-term investment and more beneficial for long-term holding.
3. Higher Spread Value
The spread refers to the difference between the selling (buyback) price and the buying price. Compared to other capital market products, gold price fluctuations are heavily influenced by economic conditions such as inflation rates and exchange rates.
Therefore, to achieve optimal investment returns, make sure to sell gold when prices are high and the spread is relatively small.