Gold Investment vs Fixed Deposits (2)
In the last blog article, we got to figure out the pros and cons of gold investment and fixed deposits, so let us move on to their potential risks today.
1. Fixed deposits being unable to hedge against inflations
Looking back in 2018, the average annual inflation rate was approximately 2.4%. Thus, the mentioned 0.25% - 3.5% returns of fixed deposits are way too low for getting aligned with inflation. Unfortunately, there is still a potential risk of resulting in loss when this circumstance happens.
In contrast, gold has always been a good option for hedging against inflation. Its gradually appreciating prices are about to get the same as inflation rates, hence it could be a safer method for earning passive income.
2. Low flexibility
As gold investors are always welcome to exit the market anytime, the flexibility for choosing fixed deposits are lower because of the obligation of collecting the capital and interests until the end of tenure.
In conclusion, gold is more feasible in terms of going for a longer-term investment, while fixed deposits are suitable for the other way round. If you have a large sum of capital, the ability to earn interest makes fixed deposits a wiser choice.
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