I won't claim to be a financial expert, but just share what I am currently doing. I am selling equities and raising cash as the market rises currently. This is because I expect prices to go a lot lower yet this year and see the rebound in the stock market as a short term phenomenon, as I believe the underlying economy will face challenges for years to come. I could be wrong, but I am old enough that I won't necessarily have enough time to recover my gains by the time I need the money to support me. If I was decades younger, I might have a different approach
People invest in gold because they believe it will hold its value better or even see prices increases in times of economic uncertainty, because they believe it has inherent value. I am neutral on this and don't invest in gold.
Gold is just below its 20 year high, I think it is not a good buy right now. I'm not selling, but I'm definitely not buying. A good mutual fund would be my recommendation if you are investing now. Personally I'd sit on my cash position for the short term until we see where this COVID-19 crisis is going.
Even in good times, mutual funds should always be avoided. They are a facade, an illusion of reality.
With gold, it's value is always based on public perception of it's perceived 'worth'. The problem with gold, is that it is easy stolen from your safe keeping. The problem with keeping gold in paper-form held with a bank, is that the bank has to remain financially viable for your gold to be cashable at any given time. Paper can disappear quickly if the bank wants it to!
In certain times as well as uncertain times, an old fashioned GIC (guaranteed investment certificate) purchased from a requitable financial institution (not a little-known credit union), will always have a guaranteed value with time, of which is protected by the insurance the bank itself carries for all deposits on hand.
@SecondMarge No, I don't mean an annuity. I was correctly referring to mutual funds specifically.
Mutual funds have gone up over the past many decades because people invest in them, not because the stock-traded companies behind the investments have actually made a ton of money! For example, since 2008 the American banking industry has pretty much gone into Receivership. Banks have failed en masse because of gross incompetency demonstrated within the American banking industry at the CEO level.
However, if you look at a bank stock-related mutual fund, it's performance could be showing a stellar performance, when in fact most American banks have not been able to turn a profit for over the last 12 years. Yet somehow, some way, the mutual fund that represents those banking stocks have been pulling double-digit annualized returns for the mutual fund holders!
Have you ever heard of a 'shell game' before?
A mutual fund is a shell game!
What you are looking at when you analyze a mutual fund's performance, is the amount of cash from individual investors that has been dragged into the fund itself; you are not looking at the underlying stock values that the mutual fund itself is allegedly based upon. You are only looking at the 'fund' value. The fund itself however, is an intangible entity, unlike an actual registered 'stock' which represents fractional ownership of a real bricks and mortar company.
And just because your 'fund' is based on a specific industry, it does not mean that your money is actually invested in that specific industry. Mutual fund companies are notorious for 'robbing' from one fund's performance to add-to another fund that has been under-performing to make the overall mutual fund company's performance look very positive with no negatives to report.
When you invest in a mutual fund, you are not investing in the companies that are represented in the fund because you are not invested in the stock market, period. You are only investing in a so-called 'pyramid scheme' which is commonly known as a 'mutual fund', which is a marketing strategy that is wholly dependent on investors adding their own money to the fund which then makes it appear as if the stocks held within the fund have actually gone up in value, when in fact those stock values could be decreasing on the stock exchange.
If the individual stock values are going down because of a market crash, some mutual funds which hold those same stocks will actually go up in value if the mutual fund Manager somehow convinces all his clients that they need to invest more money into the fund.
And when they do invest more cash into the fund, it is THEIR money being added to the fund that causes the fund's value to go up; it is not the declining value of the actual stocks held within the fund that mysteriously causes the fund's value to go up!
In other words, all perceived profit increase within a mutual fund is coming from investors who keep adding more money to the fund. The profit is not coming from stock-traded companies that are barely able to stay out of bankruptcy.
But as long as more people keep investing in a particular mutual fund, the value of that fund will continue to rise, irrespective of the stock valuations that the fund is allegedly based upon. And as soon as people start pulling their money out of a specific fund, the fund value will immediately start falling, even though the stocks held within the fund may not have budged in value at all! This is because a mutual fund is a legal 'pyramid scheme'!
Therefore, either invest directly in the actual stocks of a stock market and do so through a Broker (or self-directed day-trading), or get out of the stock market entirely. Getting out of the stock market entirely means, stay away from mutual fund companies, all of which pretend to the investors that they are invested in the stock market when in fact, they are not!
The cash investments that the mutual fund company receives from individuals who invest their life savings into their mutual fund, is most definitely re-invested in the stock market for the sole benefit of the mutual fund company itself, not the investors who invested in a 'fund'.
But the benefit or loss that you receive as a mutual fund holder has absolutely nothing to do with the stocks the mutual fund company has chosen to invest everyone's money in!
The mutual fund company invests in the stock market to make ITSELF money, but you as an investor are only invested in a marketing product offered by the investing company. That product is called a 'fund', not a stock!
One final note, a mutual fund company will always charge you a management expense ratio of around 2% to manage your mutual fund account.
They charge 2% if the fund goes up and they STILL charge 2% of your account's gross asset value, even if the fund you are invested in has tanked by 75%!
Whatever value is remaining in your account at the end of the day is charged 2% to manage it. Therefore, the mutual fund company ALWAYS makes money off it's investors regardless of the direction of the economy.
Mutual funds are a 'pyramid scheme'! Stay away from them!
Not sure what country you are in where that is the case.it isnt in the US. MF by the major companies are mostly index funds that own all the funds in an index like the S&P 500 and trade at approx the NAV which is the value of the underlying stocks. The cost is as low as .02% or even free. The SEC tightly regulates@swirlie them and there is nothing that remotely resembles a pyramid scheme. Bank profits are hurt by low interest rates but US banks with rare exception are profitable and most pay a nice dividend from that profit.
I feel badly that things are run so crookedly in your country.
@SecondMarge Not sure who fed you the the illusion of how your banking system functions, because it was the American banking system that invented the 'pyramid scheme' approach to mutual fund investing in the first place.
If you think that you are 'directly' invested in the stock market by your own personal investment in mutual funds, you have indeed been deluded of the reality that surrounds the American Financial Industry.
And besides that fact SecondMarge, if you know so much about mutual fund investing and the finer financial detailing that lies at the heart of mutual fund investing, then why in the fuck would you come on here and post a question that reads.. "Any financial experts out there? Better to invest in gold or mutual funds now?".
If you thought that you already knew what you were talking about, then why would you troll this website seeking financial advice while conveying the demeanor of being a rank amateur at investing?
