Gold: How to insure against the next financial disaster

Julie Brownlee, Fsp Invest, 05 Jun. 2015

Tags: gold, financial disaster, investment insurance, financial disaster insurance, investing in gold, gold bullion,

The financial crisis of 2008 is still fresh in the memory of many investors. The stock market fell and the world’s financial markets were in chaos.

So how can you protect your investments against this happening again?

Read on to find out…

You need financial disaster insurance

If you’re worried about another financial disaster, you can protect yourself with this insurance.

By buying this insurance, you’re spending a little bit of money to hedge yourself against a disaster, Brian Hunt in The Crux explains.

You’ll likely have insurance for your home and car. You just hope you never have to use it. And this investment insurance works in just the same way.

The simplest way to insure your investments against a financial disaster is to invest a small amount of your wealth into gold bullion.

The importance of gold as insurance

The chances of another financial disaster are slim, but you can hedge yourself against this potential disaster. If a financial disaster did happen, investors will flock to gold, pushing its price strongly higher.

To benefit from gold as insurance, you don’t have to commit a lot of your investment capital. Aim for around 5% of your portfolio in physical gold.

For example, if you have a portfolio worth R100,000 you could hold 95% in stocks and bonds, and the remaining 5% in gold. That’s just R5,000.

If a financial disaster doesn’t happen, your stocks and bonds will rise in value. Your gold may not do anything, but with the majority of your cash in stocks and bonds, your wealth should grow.

But if a financial disaster did happen, a rise in the gold price would help offset some of the decline in the value of your stocks and bonds.

Owning gold gives you peace of mind. If you don’t hold gold bullion already, you should think about owning some.

So there you have it, how to insure against the next financial disaster.

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