When it comes to saving, people are often confused between holding cash and investing in precious metals like gold or silver. Whereas cash is the most liquid asset, gold is the most secure way to save. Let us guide you through the advantages and disadvantages that are associated with saving in cash or gold.
Benefits of holding cash
When uncertain times turn up, cash might be the most reliable source of income because of its nature of being highly liquid. In this battle of cash vs gold, many people turn towards cash because:
Cash is Flexible
As an asset, cash is flexible in times of need. When an emergency or once in a lifetime opportunity comes up, it is liquid cash which is most useful.
Cash is Familiar
A banknote is a promissory note that transfers wealth from one to another. This note is familiar to everybody around you and therefore nobody hesitates accepting cash whereas other assets could have some hesitance in getting preferred.
Cash requires minimum interaction with others
While holding in cash, all you need to interact with is the bank representative. Even though holding or saving cash does not require communication, it isn’t the most reliable.
Disadvantages of holding cash
Cash can be deflected from your bank account
If you’re holding your cash in the bank account, it may accumulate interest but it cannot be protected from the risk of a bank collapsing due to an economic downturn. Systemic risk is built into the banking system, and if your bank were to collapse a saver is only covered by a minimum amount, and there’s no guarantee that this or future governments will bail banks out.
Holding onto cash won’t make you wealthy
Fearful from the insecurity of the banking systems, if you decide to hold cash into lockers and vaults, it won’t escalate to more. Also, the government can de-value the cash overnight by printing more money.
Benefits of Gold
Seasoned gold buyers understand the profit potential behind the precious metal. When it comes to safeguarding your hard-earned wealth, your cash may be better off in gold, not paper money, for the following reasons:
The value increases even when saved in vaults
As a physical asset with an established value that consistently climbs, gold has a host of benefits that make it the investment platform of choice to a number of individuals and organizations. Gold’s scarcity and rate of discovery have allowed it to become a universally accepted currency and material asset. Buy gold and keep it safe, it still will be an investment.
Hedge against inflation
Even the most trying of circumstance in today’s modern world, nothing can pressurize gold’s value as it would perhaps threaten to collapse an unprepared banking institution. If anything, such circumstances only serve to increase gold’s worth due to its solid reputation as a safe haven investment.
Gold is not Fiat currency
Due to its inherent scarcity, gold will always be supported. This precious metal has maintained its purchasing power over long periods of time, unlike all of the fiat paper currencies that have been introduced over the years.
It is not being said that one’s wealth should be entirely removed from the banking system and instead placed into its counterpart value in gold. Even with the precious metal being as easily liquidated as it is, cash and banks are essential for accessing and transferring your money for daily transactions.
However, as part of a long term strategy, there is a guarantee of total security from fluctuations in tax, inflation and currency degradation, physical gold investment is excellent as part of a balanced portfolio. Gold is the high performing asset in the 21st century, demonstrating 300% growth more than the traditional saving methods.
Saving in gold is now made easy with a solely digital platform, 31p1’s gold saving account. Savers can keep a track of their cash and save in different denominations of gold. To sign up to this smart saving systems, log in to www.31p1.com .
Partner: Self Improvement from SelfGrowth.com