How to diversify your portfolio strategically with precious metals and other key asset classes
You can help protect your wealth against the risks associated with any one type of asset by allocating portions of your wealth across a variety of asset classes. Dividing your money among different asset classes is called diversification. When you diversify your portfolio, you may lower your financial risk and potentially increase your profit potential over the long term.
To reap the benefits of diversification, it’s important to consider diversifying your portfolio on two levels: within your overall portfolio and within individual asset classes of your portfolio. This means you may want to consider different asset classes as well as different assets within each class.
As an asset class, precious metals can offer many benefits, and incorporating them into your portfolio can be easy. U.S. Money Reserve explains how you can diversify your portfolio with precious metals such as gold, silver, platinum, and palladium.
How to Choose Asset Classes When Diversifying Your Portfolio
When deciding how to diversify your portfolio, it can be worth exploring all asset classes available to you. These may include stocks, bonds, money market funds, certificates of deposit (CDs), real estate, and precious metals. Each class offers its own benefits and potential risks.
Chartered financial analyst Amy C. Arnott has explained that a well-constructed portfolio may have “better risk-adjusted returns than its component parts alone.” Here, Arnott is referring to minimizing financial risk by diversifying your portfolio with strategic asset classes.
Though each asset class offers its own benefits, adding precious metals to your portfolio is a great way to give your portfolio a defensive hedge. Gold and other precious metals have historically helped offset dips in stock prices and other assets in times of economic downturns. Thus, precious metals have the potential to help balance your overall portfolio and help protect your wealth.
How to Choose Precious Metals for Your Portfolio
Precious metals can make up a significant part of a diversified portfolio—but how do you know which metals to opt for? Each precious metal offers unique benefits when it comes to diversifying your portfolio. Buyers may want to compare important factors such as the price, demand, and volatility of each metal when deciding which metals and quantities to purchase.
When choosing your precious metals, remember that the price of each metal can fluctuate based on different factors. For example, while the price of silver might rise in line with demand for solar panels, solar panel demand is historically unlikely to affect the price of gold. Choosing a variety of precious metals can diversify your portfolio within the asset class itself and help you even out any ups and downs that may impact a particular precious metal.
Once you’ve chosen your precious metals, you’ll need to decide on which types of that metal to buy. Each precious metal is available in various forms, weights, and sizes. For example, physical gold is available as bullion coins, certified coins, and bars. Each of these options may respond to different market conditions over time. In gold’s case, adding a variety of gold types to your portfolio could potentially act as a strong defensive hedge.
Contact a U.S. Money Reserve Account Executive today to learn more about how you may be able to diversify your portfolio with precious metals.
About U.S. Money Reserve, America’s Gold Authority®
U.S. Money Reserve is one of the nation’s largest private distributors of government-issued gold, silver, platinum, and palladium products.
Founded in 2001, U.S. Money Reserve has grown into one of the world’s largest private distributors of U.S. and foreign government-issued gold, silver, platinum, and palladium legal-tender products. Hundreds of thousands of clients across the country rely on U.S. Money Reserve to diversify their assets with physical precious metals, primarily in the form of legal-tender gold and silver coins.
U.S. Money Reserve’s uniquely trained team includes coin research and numismatic professionals equipped with the market knowledge to find products for precious metals buyers at every level. U.S. Money Reserve goes above the industry standard to provide superior customer service, with the goal of establishing a long-term relationship with each and every one of its customers. U.S. Money Reserve is based in Austin, Texas. Like them on Facebook, connect on LinkedIn, and follow on Twitter.