Clear Your Confusion between Investing in the Stock Market or Gold! Read This

By Sakshi Srivastava - 25 May 2022 Last Updated: 05 Jul 2022
Clear Your Confusion between Investing in the Stock Market or Gold! Read This

Many people find deciding whether to invest in the stock market or gold to be a difficult issue. While some investors prefer gold above all other investment options, others favor stocks for long-term growth and prosperity. What is the best option for you is largely determined by your investing objectives, lifestyle preferences, personality, and other factors.

People in the United Arab Emirates have always invested in tangible assets. However, we've witnessed a growing movement toward financial assets in recent years. When comparing stock market and gold investing, there are a few crucial factors to consider.

When it comes to gold investment, investors put their money in when the price is low and hold it until the market price rises to the predicted level. Investors typically spend their money in the stock market when values are high, and they do not wait for the market to recover during the correction phase. As a result, by selling the stocks at a cheap price, they end up losing money.

Thus in this blog, Dhanguard will extensively discuss, which kind of investment will be optimum for you, whether Stock Market or Gold in the UAE. So without any further ado, let’s learn!

Gold & Stock Market: A Comparison 

Investing in Gold

By purchasing gold coins or gold bullion, you are making a physical investment in gold. Gold is one of the most popular investments in the UAE, particularly in Dubai. Its strong pillars are high liquidity and inflation-beating characteristics, as well as status, appeal, and a variety of other attributes. When the market encounters a drop in gold rates, there are numerous phases that occur, but the lower market price of gold will not stay for long, and gold rates will eventually rise dramatically. Furthermore, buying and selling this valuable metal is a piece of cake.

Investing in Stock Market

When you buy stock, you're actually buying a piece of the company. For example, if a company has 1,000,000 shares outstanding and you buy 10,000 of them, you own 1% of the company.

As the value of the company's stock rises, so does the value of your stock. The organization's board of directors, which is elected by stockholders like you to oversee management, ultimately chooses how much of the profit is "reinvested in expansion" and how much is "given out as cash dividends" each year.

Why should you Invest in the Stock Market?

For the following reasons, the stock market is seen as a good investment option:

Payouts

Investing in high-quality companies can help you increase your profits year after year while also boosting your cash dividends. As the company's earnings increase, you will receive larger payments in the mail. And if you keep your stocks for the long run and reinvest your dividends, your wealth will skyrocket in a few years.

Financing

Taking out a loan against your stock is a lot easier. If your broker has approved margin borrowing (which usually requires you to fill out a form), it's as easy as pie. If the fund is not available, a debt is created against your stocks, and you must pay interest on it, which is generally rather minimal.

Less Effort

Unlike running a small business, owning a piece of the company through stock does not require you to perform any work (besides investigating each organization/business to determine whether it is a good investment).

Long Term Viability

Numerous studies have shown that buying stocks, reinvesting dividends, and holding them for a long period, regardless of market collapses, helps to build a robust wealth. Nothing else, in the form of other asset classes, can compare to owning a business, and when you invest your hard-earned money in the stock market to buy a firm's shares, you are buying a piece of that company.

Liquidity of Stocks

Stocks have a lot of liquidity. You can sell out your entire stake numerous times during regular market hours in just a few seconds.

Read More: Want to make Risk Free Investments? Read about these 4 Safest Investment Options in UAE.

Why Should You Invest in Gold?

Some of the main reasons why most individuals prefer to invest their hard-earned money in gold over other investment opportunities are as follows-

Varied Investment Portfolio

The primary goal of a diversified investment portfolio is to identify investment opportunities that are unrelated to one another. Other assets, such as mutual funds and equities, have historically had a negative association with this yellow metal. As a result, it proves to be a useful financial instrument for diversifying your investment portfolio.

Liquidity

Gold is significantly more liquid than stocks in terms of portability and liquidity. Gold bullions and coins, in particular, are good investments since they are both portable and extremely liquid. It can be sent anywhere in the world and sold in a matter of minutes.

No storage and maintenance costs

Gold does not require storage and can be kept in a locker. Furthermore, this yellow metal has a high value density. Thousands of dirhams of gold can be carried in your home without incurring any transport costs.

Investment 

Due to the fact that the price of gold tends to rise in tandem with the cost of living, it has shown to be an excellent inflation hedge.

Holds Significant Value

Unlike paper money, the value of this yellow metal has remained constant over the years. People in the UAE have treasured this metal for generations, handing it down from generation to generation to preserve their wealth.

Conclusion 

So, deciding between the stock market and gold as a superior investment option is entirely dependent on the type of investment portfolio you are attempting to establish. An appropriate investment portfolio is one in which you can easily discover the right mix of risk and reward for the short and long term. It is not recommended, however, to put all of your money into one investment instrument. Simply diversify your investments to build a robust long-term wealth. Thus, we hope this blog provided you with insightful information. For more information on other related aspects, feel free to check out our website as well or get in touch with our experts by visiting our Branch Office.

Investments is made simple and hassle-free with Dhanguard in Dubai, UAE. We provide you various investment options like Index Fund, Gold, Mutual Fund, Stocks, SIPs, Bonds, Fixed Deposite, Sukuks with the minimum possible trouble including paperwork & payments.

By Sakshi Srivastava

25-May, 2022

Investments Related FAQ

Frequently Asked Questions

  • Why should one Invest?

    Earning money now is insufficient, since it may not be enough to meet life's financial objectives. As a result, it is critical to spend money. Saving money in the bank is the same as giving up an opportunity to make money. It is crucial to invest carefully in the different plans available on the market, choosing the one that is ideally tailored to your objectives.

  • What is the eligibility to buy Investment Plans?

    With new technologies and goods, the investment market is rising by the day. The conditions for investing in different forms of investment instruments differ depending on the providers in the UAE.

  • What are the best Investment for Expats in UAE?

    Expats can invest in stocks, bonds, real estate, cash, UAE mutual funds, or other forms of funds in the UAE.

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