The smarter way to diversify your portfolio with precious metals

We all know the expression ‘Never put all your eggs in one basket.’

That’s diversification in a nutshell. The theory is that events that impact the financial markets don’t affect every asset in the same way. In fact, some events can result in opposite reactions. For example, when the share market loses value, precious metals tend to hold their value.

This is why diversification is a popular investment strategy. Its aim is to help you sail more smoothly through the occasional financial storm — reducing your overall risk by spreading your investments across a range of different assets and asset types. And although diversification doesn’t guarantee against suffering a loss, it can be an important and effective tool in minimizing risk.

Diversification is based on a dissertation called “Portfolio Selection”, that was first published in the ‘Journal of Finance’ in 1952 by an economist named Harry Markowitz. In this influential work, which has guided investment theory ever since, he demonstrated that a diversified portfolio is less volatile than the total sum of its individual parts. Whilst an individual asset might be volatile, not all assets will be volatile at the same time.

Asset allocation and selection

The arrangement of different assets from different classes in your portfolio is known as ‘asset allocation’. So, how do you assess which assets to invest in?

There are two key things people usually take into account:

1. What’s the potential return?
2. How much risk is involved?

A well-diversified portfolio will generally include a blend of higher and lower risk assets. The general balance between the assets is usually determined by the investor’s age and life stage. Usually the closer you are to retirement, the lower risk you want your portfolio to be — because the less time you have up your sleeve to ride out any market dips.

But at the end of the day, you’ll need to make your own decisions about risk and return. Everyone’s expectations and comfort levels are different. It’s always a good idea to speak to a trusted, experienced, qualified financial advisor before committing to any new investment.

Precious metals: the classic diversification play.

There’s been a recent surge in interest in precious metals, as savvy investors look for ways to protect their wealth from inflation and economic uncertainty. Precious metals have been a tangible way to hold wealth for thousands of years — and they still are to this day. Only today, they have the added benefit of their price correlation with volatile markets. In uncertain and inflationary times the price of gold tends to increase, making it valuable as a hedge.

Tokenized precious metals: the new way to diversify your portfolio

By tokenizing precious metals, we’ve made it significantly easier for you to diversify your portfolio with gold, silver and platinum.

Purchasing physical metals comes with the obstacles of cost, transport, storage and security, which have prevented everyday investors from getting involved. Tokenization eliminates these obstacles — making it possible for virtually anyone to buy gold and other precious metals quickly, easily, and cost-effectively on the Dacxi Wealth Platform. Here’s how it works.

Each Dacxi gold, silver or platinum token is the digital representation of one ounce of the highest -quality precious metal. So when you buy a Dacxi tokenized precious metal, you’re in fact buying the real thing — minus the transport, logistics, storage, and security concerns.

The physical metal your token represents is stored on your behalf in the vaults of one of the world’s leading bullion houses. The matching tokens are stored securely in your personal wallets on the Dacxi Wealth Platform, and are fully redeemable whenever you wish to sell. And because everything is digital, you can choose to buy just a fraction of an ounce of a precious metal. So there’s no high-cost barrier to entry, either.

The Dacxi Wealth Platform: A better way to buy precious metals

In uncertain times like today, Dacxi tokenized precious metals is the better and smarter way to diversify your portfolio. And getting started takes just three simple steps:

1. If you haven’t already, create a client account at the Dacxi Wealth Platform here
2. Verify your account according to KYC and AML regulations
3. Start buying and selling tokenized precious metals with Dacxi

https://dacxi.com/au/blog/The-smarter-way-to-diversify-your-portfolio-with-precious-metals