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Location: Level 2/627 Chapel St,
South Yarra VIC 3141
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With so many investment options and venues out there, it can be challenging to choose the right asset type when planning your long-term investments. In this article, we demystify the myths around popular long-term investment options, including real estate, gold, and savings accounts to help you create that perfect portfolio. We discuss each investment type in terms of their specific features, risks, and benefits.
Gold has, forever, been considered the safest hedge against inflation, which means people invest in gold to keep or grow the value of their funds over time, especially to beat inflation. Gold is a wonderful investment option for those seeking to mitigate the risks of their other investment venues, such as the stock market and cryptocurrencies.
Risk: Gold has traditionally been a low-risk asset. This is why it is a great investment option for folios with a low tolerance for market-associated risks.
Liquidity: Liquidity can sometimes be a problem because the price of gold can be volatile.
Returns: Historically, gold has produced decent returns for investors. Between 1950 and 2023, gold yielded 9.18% CAGR or average annual return, which may not be as good as the returns delivered by real estate or stocks, but still quite amazing considering its low risk and global value.
Who is it for? – Anyone looking to diversify their portfolio to manage risks and protect it against inflation.
A savings account is another popular and fairly good investment option, but it comes now here near gold or real estate in terms of returns. It refers to a financial account with a bank or other institution that stores and protects your money and usually pays some return.
Risk: The risk in a savings account is usually very low. It can be considered one of the safest types of investments.
Liquidity: Another benefit of a savings account is easy access to your funds anytime you need them. It’s the best option in terms of liquidity.
Returns: The returns from a savings bank account are among the lowest of all investment options. A bank account pays in the range of 2-5% annually, which is less than the typical rate of inflation.
Who is it for? – It’s not a great investment option in terms of returns, but it is safe and instantly available if that’s what you’re looking for. So, it’s an excellent choice to store emergency money.
The third most popular long-term investment asset in our list is real estate, which, tbh, has been a preferred investment choice for generations. Real estate is liked by all kinds of people all over the world. This is because it is safe and can deliver great returns in the long term with moderate risks.
Risks: The risk of loss in a real estate investment is usually low. However, the risk of fraud is there.
Liquidity: Liquidity can be a major problem in real estate investments because finding a seller for an entire property can be challenging. Also, the high cost of entry limits its accessibility and makes it an expensive investment option.
Returns: Traditionally, the real estate market has delivered humongous returns for investors. And this is only going to increase with the increasing population and demand.
The concept of asset tokenization has disrupted the real estate investment industry over the last few years and offers solutions to the problems of liquidity, accessibility, and affordability in real estate. Platforms like Bitstake are making real estate investments affordable and accessible for everyone worldwide by offering access to tokenized real estate with the option to buy fractional ownership in a property through blockchain tokens called BITs.
The token price, i.e. minimum investment, can be as low as A$100 depending on the property. These properties can be located in Australia or anywhere in the world, and anyone from anywhere in the world can invest in them online using a cryptocurrency wallet or a credit card.
You can find out more or check out the latest tokenized properties here
IMHO, the best investment is a diversified portfolio that includes all the major forms of investment managed according to your risk levels. All the above types of investment we discussed in this article are good in their respective ways, and may even be necessary, in different conditions. So, you need to analyze your particular preferences and goals, define your risks, and build an investment portfolio that combines all or at least some of these investment types to help diversify risks. Real Estate, for instance, can be a wonderful investment to mitigate the risks of stock and crypto markets in your portfolio.
Location: Level 2/627 Chapel St,
South Yarra VIC 3141