Diversification of the investment portfolio is one of the most important strategies that investors resort to by owning many assets and reducing the risk of falling global markets, investment diversification ensures the rebalancing of your portfolio regardless of the type of assets you own and helps you earn more gains in long-term investment.
Given the global economic conditions, fears of a possible global recession, and the continuous raising of interest rates in many countries to fight inflation, it is difficult for investors to make their choices regarding the best available investment mechanisms.
Therefore, investors resort to diversifying their investments to identify safe and less risky assets, and for many years it has been customary for investors to keep their savings, whether in real estate, stocks, bonds or gold.
For centuries, gold has been considered a major hedge against inflation, but more and more people are starting to view digital currencies as a store of value, thus bitcoin has earned a reputation as digital gold.
The American website Investopedia specializing in investment education published an article explaining the difference between investing in bitcoin and gold.
The report initially indicated some important definitions:
What is a store of value
A store of value is an asset that does not lose value over time, paper money is considered a bad store of value, cash can be used as a medium of daily exchange and short-term liquidity, but over time it will lose its value.
What is inflation
Inflation is the primary tool that governments around the world use to control money supply and price movements.
The authorities devalue their currencies a little each year, prompting people to spend or invest more in the hope that this will stimulate economic growth through job creation.
Therefore, money loses its value over time, and savings must be stored in an asset that retains its value, which is why people invest in buying gold or stocks, bonds, real estate and other assets that maintain or even increase in value over time for profit.
Therefore, money loses its value over time, and savings must be stored in an asset that retains its value, which is why people invest in buying gold or stocks, bonds, real estate and other assets that maintain or even increase in value over time for profit.
Investing in gold
When financial markets are under pressure, investors buy gold as a safe haven, and even when the economy is recovering, they buy more jewelry.
One of the important points that supports investing in gold is that its ownership is spread all over the world, and it is mined in almost all countries.
A report published by the website TheMotleyFool and compared investment in gold and cryptocurrencies indicates that gold's performance amid high inflation this year was not good, and despite being traded as a rare commodity and a safe haven, its prices fell by about 20% last September from their peak in March.
The report points out that one of the main factors of gold's performance is the strength of the US dollar, which has reached its highest point in two decades during the recent period, and with the economic slowdown in China and Europe, investors are rushing to it, which means that investing in gold does not tend to perform well when the dollar is strong.
Investing in digital currencies
When compared to gold, we find that the demand for cryptocurrencies is limited to speculation, and investors perceive them as a high-risk bet and their returns are high.
The report indicates that digital currencies are subject to significant price fluctuations, as their prices rise and fall depending on price speculation.
Although cryptocurrencies are available to everyone, entities in 5 countries control 80% of the mining capacity of the Bitcoin network, and 2% of the owners of this currency own 95% of all available Bitcoins.
The report shows that gold moves independently of stock markets, while digital currencies do not follow this pattern.
He emphasizes that bitcoin and digital currencies still lack a longer period of time to see whether or not it can be an effective means of hedging against inflation.
He shows that it is relatively easy to buy and sell digital currencies and gold, but gold still has a more established advantage in its circulation.
moreover, the analyticsinsight website published an article for a group of financial advisors on the best ways to invest money in real estate, which stated the following:
Buying a property for rent
One of the best investments you can make is renting real estate, because you are able to generate income from your tenants, and rental real estate can be a great way to diversify your investment portfolio and protect yourself from stock market fluctuations.
In addition, if you manage to find a tenant who is willing to pay a rent higher than the property payments, you will be able to make a steady income every month, and as soon as you make more money than the initial purchase price you will have a secondary source of income forever.
Partial investment in real estate
Platforms like Fundraise and Groundfloor allow you to invest partially in real estate or invest in real estate index funds, meaning you can own a piece of real estate - such as an apartment complex - without having to set the entire purchase price yourself.
Partial ownership gives you all the advantages of owning real estate, such as monthly cash flow without the hassle or expense of being a property owner, and in addition you can start with a small amount that does not exceed 10 dollars and there are no administration fees.
There are also many emerging artificial intelligence applications for real estate investors that are worth checking out, and this is one of the best ways to invest your money with the availability of many options, and it is important to do research and choose the right investment for you, as well as Remember to diversify your portfolio to reduce risks and not invest in something you don't understand.
It is important to note that no investment is completely risk-free, and each option has its own advantages and disadvantages. Ultimately, the best investment option for protecting savings depends on an individual's financial goals, risk tolerance, and investment strategy.
