This September will be eventful as the Federal Reserve prepares to meet to decide the next steps it will take to tame inflation, which still sits above its goal and hovers slightly above 3%. As investors grapple with the possibility of another rate hike and its implications on the markets over the coming weeks, it may be an appropriate time to optimize your portfolio to help mitigate against future risk.
In times like these, investors often incorporate gold into their allocation strategy to hedge against economic uncertainty and high inflation. Should you invest in gold, too? CBS MoneyWatch spoke with Dan Tolomay, chief investment officer at Trust Company of the South, to find out what you need to know.
According to Tolomay, the decision to invest in gold or not hinges on your unique financial objectives. It’s probably not the most appropriate choice if you aim to seek substantial returns.
“Stocks may pay dividends and represent a claim on the future earnings and a company’s net assets,” he tells the publication. “Bonds return the investor’s principal at maturity and typically pay a periodic interest payment. Gold, by contrast, generates no cash flow.”
However, this may not be the end-all for certain investors when deciding whether to invest in gold. For example, if you are primarily interested in protecting and shielding your portfolio from inflation, the absence of returns might not be a decisive drawback.
Click here to read the entire CBS MoneyWatch article. If you want to learn more about whether or not gold is an appropriate addition to your portfolio, please get in touch with your experienced team at Trust Company of the South today.