Why I will continue to invest in gold
My favorite investment is gold. But my best reason might be different from the answer you get from Google.
During the pandemic, my financial situation wasn’t very good and I needed money to pay my workers.
I was selling my belongings, which were sold for a fraction of the money I bought them.
It helped very little. Looking back it was a good experience learning that my belongings I thought were a lot less valuable than I thought it was.
But the only one that were priced more than when I bought it, was gold.
Gold on an emergency
In Japan we have a saying, "有事の金" which can be translated to “gold during an emergency.”
I remember gold coming down like every other investments during the pandemic, but then there was a timing when gold surged.
So like I said earlier, many things I thought were valuable lost its value during an economic slowdown. But one good reason you need to sell your valuables is in a financial emergency. Gold was the only thing that increased its value during the pandemic.
I didn’t want to sell my gold but I thought it was time and went to an established gold shop.
But I noticed something interesting. There were people selling gold like me, but there were also quite a few people buying gold. When it's an emergency like now and gold price at its highest price in history..?
The elder lady sitting near me seemed like a regular customer.
I asked the shop whether they have regulars come to buy every month, and they told me they have a whole bunch of regulars that does it for decades, even for generations.
This experience stuck with me.
It's also one experience why my worst period of my life became a lifetime lesson. I wouldn't have visited the gold shop if it weren't for the financial struggle.
The average annual return of gold
I was so surprised when I googled the annual average return of gold over the 20 years is 9%.
In Japan I hear people say something like, “Just put money on US stocks and it will turn out great.”
So I googled that, too. The average annual return of the S&P is 9.75% over 20 years.
Fair enough. It makes sense to invest in US stocks.
But again when do you need to sell your investments?
It could be during a global emergency, and you might need to sell your US stock when you don’t want to.
So when things are good globally and I need money, it’s probably good to sell a portion of my US stocks.
When things are bad globally and I need money, it’s probably good to sell a portion of my gold.
So my plan for investments is to diversify it to half stocks, half gold. I'm more hedged this way for economic slowdowns.
Use Dollar Cost Average
My experience seeing regulars come in for decades at the gold shop is the same thing as the dollar cost averaging. So I will buy a fixed amount every month regardless of how the gold price is, and this is invested for the long term.
I auto set buying 30,000JPY(211USD) of investment for a very long term, base investment for my future needs.
I can put aside 30,000JPY with no stress from a salary BELOW average than most people in Japan.
From the compound interest calculator continuing this amount will give me 25 million JPY or 175,000USD by the time I am 65 years old.
Considering that medical fees are very affordable in Japan and I have pension coming in from the government at age 65, it's enough to not have to worry about my finance during retirement.
Knowing this is really important.
Half of my investments to gold
Of the 30,000 JPY, I decided to buy 2 investments.
15,000JPY to gold
15,000JPY to MSCI All Country World Index
*It's been a year since I started investing in the gold and MSCI All Country World Index.
Gold: gain of 14%
All Country: gain of 9%
Total: 472,296JPY invested.
I'm happy with the results and the simplicity of my portfolio.
It's good to get started as fast as possible because it compounds, and you learn along the way.
I used to put 5,000JPY to S＆P BSE Sensex Index (India) but decided not to.
The reason is, the volatility is too high. The MSCI All Country World Index includes a portion of India. The percentage included in the index will probably rise if India continues to grow.
I invested in a US bond ETF (AGG) but decided not to.
The reason is currency risk. Although this bond is very appealing I learned that investing in JPY has a currency risk. All Country and gold has the potential of covering the currency risk while I have a chance of losing money for AGG.
Automate the buying process
I auto set buying to every 14th of the month, as I googled the best day to invest during the month, and it said 10-15th are slightly the better timing to buy investments.
I will see how it plays out and might make adjustments.
Timing the market and monitoring everyday is confusing and time consuming. It’s better to spend less time on investments and automate it.
I decided investing doesn’t need to be perfect, I rather have more time and less stress to dedicate more on how to make better tasting food.
*This content is sharing what worked for me and is not meant for financial advise.
I'm glad I started to invest long term, it's a good habit I learned.
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