How buying gold can help secure your finances in 2025
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Gold plays a critical role in portfolio diversification. Unlike stocks and bonds, which often move in tandem, gold behaves differently in various market conditions. During stock market downturns or when bonds underperform, gold has the potential to retain or even increase its value. By adding gold to your portfolio, you can reduce overall risk and smooth out volatility, which is especially important in uncertain times like 2025.
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Gold: A hedge against inflation
Gold has long been a trusted hedge against inflation. When inflation rises, the purchasing power of currency declines, meaning goods and services become more expensive. Gold, however, tends to hold its value, making it a reliable store of wealth. As inflationary pressures continue globally, investing in gold helps preserve your purchasing power and protect your wealth from the eroding effects of rising costs.
A safe-haven asset
Gold is often referred to as a safe-haven asset because its demand increases during times of geopolitical tension, economic instability, or market volatility.
“Gold serves as a hedge against inflation, preserving purchasing power during economic downturns. It adds stability to a portfolio during uncertain times by reducing overall risks and providing a safe haven for investors. Additionally, its role in achieving portfolio diversification ensures balanced returns and long-term financial security,” Yash Sedani, Assistant Vice President, Investment Strategy at 1 Finance says.
A long-term store of value
Gold has been used as a store of value for thousands of years, unlike fiat currencies that can be manipulated by central banks. Gold’s intrinsic value provides stability, making it a reliable asset in turbulent economic times. By holding gold, you ensure that your wealth remains protected against potential currency devaluation or economic crises.
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First Published: Jan 6, 2025 7:24 PM IST
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