A key part in investors’ decision-making processes when deciding on what to invest in is how much they can expect to gain over the long term. Most investors are really only passive investors, buying assets and holding on to them for years, rarely making major changes to their investments, and only reallocating assets within their portfolios every 5-10 years as they grow closer to retirement.
For years investors have been told that stocks are the way to go if they want to build up a solid retirement nest egg, but how many investors have actually seen benefits from that? Investors who invested in stocks from 1982-2000 saw annualized gains of about 15% per year. But since that time they’ve been lucky to get annualized gains of 5% per year. And the next 10 years don’t look to be any better.
Many investors decide to invest in a mix of stocks and bonds, with a 60/40 ratio of stocks to bonds being fairly common. That mix of investments is only expected to make 4% annual returns over the next decade according to Morgan Stanley. Other investment firms are even more pessimistic, with many expected low single digit performance or even negative performance.
That shouldn’t be too surprising, given how stocks are currently at all-time highs. There’s nothing on the horizon that will provide a big boost to corporate profits or that will lead to an improving business climate. With debt levels spiraling out of control and an ongoing trade war with China, there’s really very little to improve business performance. It’s only a matter of time before stock market prices come back down to earth and demonstrate that they’re completely out of line with economic performance.
If you’re looking at retiring within the next 10 years, there’s a good chance that your investments will underperform until then. With stock markets almost universally predicted to make minimal gains over the next decade, many investors are looking for alternatives both to protect their wealth and to continue making gains in the future.
That’s why many investors are looking to gold to safeguard their assets. Gold’s performance over the past 20 years has provided nearly double the annualized gains as stock markets, and protected investors during the worst part of the financial crisis. With another recession right around the corner, there’s no better way for investors to protect their retirement savings than by investing in gold.