Why I will continue to invest in gold

 

My favorite investment is gold. But the reason is different from the answer you get from Google.

During Covid, 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.

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 with the pandemic, but then there was a timing when gold surged. When you need to sell your investments is a lot of time an emergency. So I learned that at least a portion should be gold.

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.

The elder lady sitting near me seemed to come consistently.

I asked the shop whether they have regulars come to buy every month, and they told me they actually have a whole bunch of people doing it for decades.

First of all, Why invest?

I think one good reason to invest is to save it for emergency.

When it was emergency for me, it was during the pandemic.

The problem was, there were a lot of people having financial emergencies the majority needed to sell stocks, their branded belongings, which makes it the worst timing to sell. No profit, in most cases you lose money.

Feels miserable to sell your belongings for a fraction of what you paid for.

But gold was the only that was able to sell for a profit.

Gold, in general has a negative correlation with US stocks. So, when there is a crash in the market, gold has a good chance of going up.

Bonds also are known to have a negative correlation with stocks, but it doesn't appeal to me yet. 

I think it will make more sense to consider bonds when I am very wealthy or in the retirement stage. Then I want to protect my money with the lowest risk possible. And earn dividends so it does not lose its value against inflation.

(If you're in a high inflation rate country bonds might give you a hedge, but I live in Japan where inflation rate is very low. So, I'm happy to keep it in cash and keep it as spare money to buy more in market crashes)

If gold goes down, it means things are stable globally, which is good. 

So I’ll buy a little more gold than I do every month.

This simplicity is mentally healthy, too.

The return has been very high, too.

I was so surprised when I googled the annual average return of gold over the 20 years is 9%.

In Japan I hear people saysomething 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.

But again when do you need money? 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.

Use Dollar Cost Average

I auto set buying 30,000JPY(211USD) of investment for 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 I have pension coming in from that age, 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 

Its good to get started as fast as possible because it compounds, and yu leafn 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 MSCIAll 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 AGG but decided not to.

The reason is currency risk. Although this bond is vefy 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 not meant for financial advise.

Thanks for reading:)

Thanks for reading the content👋

In the blog I will share things I learned especially about finance and life advice. 

Japanese are relatively good savers when it comes to money, and I've been realizing it comes from good habits and mindsets that anyone can learn.

So, over time I'd like to share what I learned, and hope to learn from you, too.

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【Ryu Aomi】

Born in Yokohama, Japan. Raised in San Francisco, California.

After gaining experience in private banking in Singapore, I went on to writing for a few Japanese media online. Covid led me to pursue what I love the most which was discovering the street foods around the best food countries. This blog will be how I fund that life.