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When having some idle money, many think about saving, storing gold, foreign exchange, or investing in stocks, each of which has its own advantages and disadvantages. Depending on the knowledge and experience of each individual, they choose the investment form that suits them.
Is it advisable to sell gold and opt for savings
Among the various investment options, holding gold and savings are considered the safest and most widely used. However, with recent stable gold prices, many ponder over questions like: 'Is it wise to buy gold or opt for savings with idle money? Should I invest 10 million in gold or savings? What about 50 million?'
To address these questions, Mytour invites you to explore the article: 'Should you sell gold and opt for savings?'
The article focuses on analyzing the pros and cons of gold investment and savings, providing advice on utilizing idle funds effectively. Let's delve into it.
Should you sell gold and opt for savings?
1. Gains and losses in gold investment
Gold is a universally recognized, valuable asset used in most countries worldwide. Investing in gold is a profitable avenue when gold prices are high but less effective when they drop.
1.1 What benefits does gold investment bring?
- Gold possesses high liquidity and can be converted into cash anywhere in the world.
- The value of gold remains constant over time. During political, military, or economic crises, gold prices experience mild fluctuations, and the intrinsic value of gold remains intact.
1.2 Risks in gold investment
- Gold, being a high-value commodity, is susceptible to theft if not securely stored.
- Gold investment does not generate regular income. Profit is realized only when you sell gold at a higher price than the initial purchase.
- Gold jewelry purchases are prone to depreciation.
2. Gains and losses in savings
Savings is a secure investment method that helps you increase the value of idle funds. After each savings period, you receive a profit based on the initial deposit amount.
2.1 What benefits does savings offer?
- Savings is a secure financial investment channel, immune to theft or loss, unlike storing gold or keeping cash at home.
- With a guaranteed savings amount in banks, you create conditions for borrowing, studying abroad, or executing other financial plans.
- Flexible deposit periods provide a stable monthly income.
2.2 Risks in savings
- During economic inflation, the deposited amount may lose its initial value.
- Constrained by deposit periods. Withdrawing savings before the term results in minimal interest returns.
- Deposit insurance payout limits in Vietnam are relatively low, a maximum of 75 million VND per savings account. In the event of a bank insolvency, exceeding 75 million VND, both principal and interest, is not compensated, posing a high risk of loss.
- Replacing or repairing a lost/damaged savings passbook involves complex procedures and consumes significant time.
3. Should you sell gold and opt for savings?
To answer this question, Mytour invites you to consider the following 2 examples:
Example 1: Mr. A currently owns 2 taels of gold (current gold price is around 36.6 million VND/tael). Let's assume that by June 2019, the gold price shows a slight increase (38 million VND/tael). At that time:
- The profit Mr. A would receive if selling gold: (40 million - 36.6 million) x 2 = 2.8 million
- The actual profit Mr. A would achieve if opting for savings (bank interest rate is 7% per year): 72 million X 7% = 5.04 million
In this scenario, we can observe that in a favorable market, owning a small amount of gold for storage or selling gold for savings does not significantly impact the investor's income
Example 2: Mr. B owns 20 taels of gold, and by June 2019, the gold price remains stable, with an inflation rate maintained below 4% per year. At that time:
- The profit Mr. A would receive if selling gold: (38 million - 36.6 million) x 50 = 28 million
- The profit Mr. B would receive if opting for a 1-year fixed-term savings account (bank interest rate is 7% per year): 732 million x 7% = 51.24 million
In this case, we can see that in a favorable market, owning a relatively large amount of gold, selling gold for savings helps optimize your investment yield
In general, both investing in gold and savings bring practical benefits to individuals. Depending on the amount of gold, the money you own, your income, your current level of knowledge, and future financial plans, you will consider whether to sell gold for savings or not.
4. Should you buy gold or opt for savings in 2019?
- In 2019, with gold prices showing minimal fluctuations, banking savings are still considered a safe investment choice by many.
- Exploring new investment avenues with higher returns, such as real estate, stocks, foreign exchange, business investment, etc. (However, these investment channels also entail more risks, requiring necessary expertise for optimal profitability).
- Avoid investing more than 30% of savings in gold. The recommended investment ratio is: 30% in gold, 30% in savings, and 40% in other investment channels.
Here are some recommendations from Mytour on whether to sell gold for savings. We hope this article is helpful for you to make the final decision on whether to buy gold or opt for savings.
