Gold as a protective shield: How to cleverly diversify your portfolio!

Gold as a protective shield: How to cleverly diversify your portfolio!

Today's economic situation brings with it some challenges for many investors. Finding a way to secure your own portfolio in these uncertain times is of great importance. A diversified portfolio is the be-all and end-all. In order to achieve exactly that, stock and bond ETFs are particularly in demand, as Freie Presse describes in detail. But the strategic use of gold is also a topic that is increasingly being discussed.

Gold has proven to be a stable store of value over the past two years. The price has increased by a whopping 35 percent, which excites many investors. However, according to Ali Masarwah, managing director of Envestor, such huge returns should be viewed with caution as he does not expect them to be matched in the coming years. How gold can be used sensibly as an addition to a portfolio will be discussed in the following sections.

Why gold belongs in the depot

Many investors are considering gold, especially in times of hyperinflation and economic uncertainty. Gold is considered a safe haven and has been a proven store of value for centuries. This was also highlighted by Goldmarket, who explains that gold often retains its value during economic crises and helps diversify a portfolio. The intrinsic value of gold and its limited supply are other factors that contribute to its value preservation.

Investors have various options for investing in gold. Be it in the form of physical bars and coins or via gold ETFs, which offer an exciting and liquid alternative. These ETFs are easy to access and allow investors to profit from the price movements of the precious metal without physical gold. It's worth paying attention to certain key criteria when choosing a gold ETF, such as a minimum size of $200 million or a reasonable expense ratio of less than one percent. Some of the top gold ETFs include the SPDR Gold Trust and the iShares Gold Trust, both of which are valued by many institutional investors.

Advisable addition

Experts recommend that gold should not account for more than ten percent of total assets. This is a level of security that adds to the high-yield investments in stock and bond ETFs. Adding shares of small companies, the so-called small caps, can also be worthwhile, but involves higher risk and greater price fluctuations. Financial advisor Fabian Frey emphasized that investors should be careful with thematic ETFs, which often show significant fluctuations in value and often do not justify return expectations.

In summary, gold not only helps preserve value but also diversifies a portfolio. A strategic allocation that invests between 5 and 15 percent in gold, depending on the risk profile, can be wisely chosen to increase overall returns and minimize risks. Especially in times of crisis, it is advisable to buy small portions regularly in order to even out costs and not to invest at an inopportune time. This is how you make a good deal when investing without losing sight of your long-term goals.

With a solid mix of return potential and risk protection, combined with broad diversification, gold can put the icing on the cake for your own portfolio.