Many investors and financial professionals struggle to make sense of gold and silver bullion as a form of wealth-building asset. After all, precious metals do not offer dividends like stocks, nor do they provide investors with interests like bonds. In addition, unlike real estate, they do not allow investors to establish steady stream of passive income through rental collections. So what is exactly the basis for wealth builders to buy physical gold and silver? The answer is simple: risk management and future-proofing your wealth.
When you invest in stocks, there is a possibility of losing your capital invested. Of course, the potential rewards can be much higher than owning gold and silver when the management of the companies deliver on earning expectations. Conversely, if the companies are poorly managed and consistently making losses, your stock prices may also plummet. The frightening thing about investing in stocks is that whenever the stock market crashes, novice investors who put all their life savings into stocks watch in horror as their retirement funds evaporated overnight.
I feel sad whenever I read investors committing suicide as a result of losing all their life savings after dabbling in the stock market. They certainly don’t deserve this and something should be done to educate investors the perils of the stock market. It is true that you can make money from stocks but if you don’t practice risk management, you would end up losing your pants as well.
Bond is a form of financial instrument that allows investor to collect interest payment in exchange for investors’ money. In Singapore, the bonds issued by the government (SGS) consistently achieved very high rating from international agencies, so they are considered very safe investments with very minimal risk of default on the debt obligations by the Singapore government. However, the thing about bond investments is its liquidity as compared to stocks. Furthermore, not all bonds issued by other governments or companies are as safe as Singapore government. There are not many bonds with ratings as high as Singapore government bonds in the world. So you need to be careful when buying bonds.
And then there is property investment, which is the most viable source of passive income. However, in Singapore, the government has always maintained the stance that public housing, namely HDB, is not meant for investment purposes. Thus, apart from investing in REITs, the most viable route of making money from properties is through landed and non-landed private properties.
Notwithstanding the slew of cooling measures introduced by the government for the past few years, the private residential market is still resilient and expectations of a major price correction has not materialized. This means that investors need to fork out a fortune for making the down-payment. You also need to pay for the Additional Buyer Stamp Duty (ABSD) of 7% if the investment estate is your second property.
I am not advocating readers to put all their monies into precious metals as that would be an irresponsible thing to do. Instead, balance is always key in winning every game. In the current climate, wealth builders need to allocate some of their funds into precious metals to future-proof their wealth against market uncertainties. We cannot predict the future accurately but we can certainly ensure that our portfolio is able to withstand market shocks and mitigate potential losses through proper asset allocation. To achieve this, you need to invest in different asset classes that behave differently during market swings.
Wealth builders can buy gold and silver bars from BullionStar, one of the largest dealers based in Singapore which exempted investment grade precious metals from the goods and services tax (GST). Just like BullionStar, one of the the goals of SG Wealth Builder is to educate Singaporeans on the merits of owning gold and silver bullion as a means of wealth preservation.
BullionStar recommend people to put at least a part of their savings in gold and silver as precious metals always retain value in the long run, whereas fiat currencies, although they may function well as a medium of exchange in the short run, always depreciate in the long run.
BullionStar made it easy for our customers to buy gold and silver. You can open an account in less than a minute and buy your first gram of gold in another minute, using our product called Vault Gram® with which you can buy gold, silver and platinum in increments of as small as 1 gram.
So start to future-proof your wealth and add precious metals to your asset holding!
SG Wealth Builder