May 21, 2022
Get the pros and cons of your options here
By James Marsh
This is just a basic overview of investment options.
Some of you reading this may be friends with me on Facebook already and know my background. But for those that don’t, I’ll give you a really quick overview:
I’ve been plying my trade in the jewellery business for over 30 years now. I own two manufacturing jewellery shops in London, as well as a pawnbroker’s and an award-winning CBD oil business.
Seeing as we’re talking about pensions and investments, I know how cautious you may be (and you’re wise to be cautious).
So, I just want to show you I’m a real person with legit businesses
As well as being an online business, these jewellery shops are good, old-fashioned bricks-and-mortar shops that have been trading for 16 years now: As I write this in May 2022.
Most people who know me are aware of how much I love gold – it’s the cornerstone of my financial independence.
Not only do I sell it in my shops, of course (and trade it in my pawnbroker’s) but I invest in it, as a means of hedging against inflation and beating the low interest rates banks have to offer. I’ll explain a little more about this towards the end.
So, let’s get into things!
If you follow the news, you may have heard the government and finance experts talk about inflation and say that it’s ‘transitory.’
In case you aren’t familiar with the term (they never speak in plain English, do they?) this is just a fancy way of saying that inflation is going to be temporary...
It’s looking like inflation is here to stay for the foreseeable future.
You see, when it comes to global economic policy, the rest of the world follows America’s lead (the US dollar is, after all, the world’s ‘reserve currency’ i.e. it’s the benchmark for the rest of the world).
Here’s what he said:
At least the world’s most powerful government is finally admitting they were trying to pull the wool over everyone’s eyes, eh? We can all stop pretending now!
The UK follows America’s lead, so of course our inflation isn’t going to be ‘transitory’, either.
The truth is, with new COVID-19 variants doing the rounds, interest rates low, and lots of fresh, ‘fake’ money coming off the Bank of England’s printing press – it’s looking like we may be in for a hard time for years to come.
And I doubt the government cares...
Because they’ve made no secret of wanting to phase cash out of existence and eventually replace it completely with a new digital currency called a CBDC (which stands for Central Bank Digital Currency).
This currency will be like crypto i.e. something on a computer screen…
But unlike crypto, the government controls it and keeps its eyes on this one.
Sounds like a conspiracy theory, I know, but here’s the proof…
Our pal across the pond at the Federal Reserve, Jerome Powell, has opened his mouth again and said he’s working with MIT to develop a ‘hypothetical digital bank currency.’
China has already developed one and is trialling it in four of its cities. You know it’s only a matter of time before one starts getting developed here.
All so that the economy collapses, our money is worthless, and they can usher in the era of the CBDC?
Stranger things have happened.
That’s a fact none of us can run away from at the moment.
It’s sad news for our savings accounts, given the insulting interest rates the banks pay out on these.
Which obviously means the longer your money sits there doing nothing, the less valuable it will be.
Inflation works like a government tax. It chips away at your money’s value unless you do something to outpace it.
So, how do we stop our money from decreasing in value?
Better yet – rather than just stop it – how can we reverse the trend and make our money climb back up again? And climb above and beyond the 6% we’ve already lost?
Now, I know when people mention the word ‘investing’ – it can be intimidating.
But, if done correctly – investing some of your pension will grow your wealth, stave off inflation and give you peace of mind for retirement.
It’s all about taking the time to find trustworthy sources of information, so you can make the right decisions.
Generations of people have used investment as a means to become more financially independent when they stop working.
I mean, imagine being able to use your well-deserved OAP as little more than ‘treat money’ to spend on yourself and your family members…
All because you made smart investments. All because you don’t have to rely on the scraps thrown your way by the government and the banks.
You’re right to be cautious. You’re right to be suspicious, even.
Fools are soon parted from their money, so we do need to be careful before we start dipping our toes into the investment waters.
This way, if you do end up making some investments in the near future, you can choose the best option for yourself.
Either way, I strongly advise that you don’t rely on your pension and ISA to see you into a comfortable retirement and give you the peace of mind you deserve.
The government is making sure that certainly isn’t an option!
I’m going to run through the 7 main investment options out there, and sketch out some pros and cons.
All of them can, potentially, see off inflation and make you more comfortable (although #6 is the least likely and it’s what you’re probably doing now).
I’m sure something on this list will appeal to you.
✔ There are loads of stocks to choose from, so it offers you a lot of flexibility
✔ You can make big gains if you follow business news closely and know which companies are on the ‘up’
✖ Although not essential, you may need to pay experts and advisors to help you with your investments. The platforms you use to make your trades also come at a cost, as well.
✖ It’s probably the most time-consuming type of investing there is. You have to spend A LOT of time following what’s going on in politics, business and the economy.
Now, if you’re retired and that’s how you fancy spending your time, then this could be a lot of fun for you! But for most people, it’s going to be a difficult schedule to keep up with.
Bonds are a form of debt issued by a company or government that wants to raise some cash. When you buy a bond, you're lending the borrower your money. They pledge to pay you back in full, plus interest – which is paid to you monthly.
✔ You get a return on your investment coming back to you monthly – you don’t have to wait years to see the gains.
✔ They’re generally considered to be a safe investment because the borrowers are so creditworthy. You’re lending money to the government and very large, wealthy companies so that they can fund their projects. They’re good for it.
✖ Inflation can mess up your best-laid plans. If your bond has a fixed interest rate of 5%, for example, the current 6% inflation rate squashes your gains. So you LOSE money.
✖ Although you’re generally safe if you lend to the government and big organisations, you face bigger risks if you lend to smaller companies. They may default on their payments, depending on their own financial health.
Cryptocurrencies such as bitcoin, Ethereum and dogecoin (you may have heard of some of these in the news) are a form of digital currency separate to pound sterling. They are technically ‘stocks’, but I’ve given them a separate write-up here – because when most people think about ‘stocks’, they tend to think about shares in actual companies.
The whole point of crypto is that it’s a ‘decentralised’ currency i.e. it’s not controlled by the Bank of England. It’s like a privately-run version of money. Obviously, there’s a lot more to cryptocurrencies than this and it all gets a bit technical – but that’s the basic overview, in case you’re not too familiar with it.
✔ The reason crypto has become so popular in the news is because people have made fortunes from it in a short space of time. The returns on investment on some cryptos have beaten pretty much every other option on this list. Get your timing right, and you can make a lot of money with crypto.
✔ As I mentioned before, cash has a limited shelf-life. How long it will last for, no one knows – but there’s clear evidence the government is planning to switch to a digital currency, eventually. Crypto has already beaten them to the punch – it’s a digital currency that the government can’t spy on. Which is why they hate it (imagine you have a nosey neighbour who’s always spying on you in your garden, so you build a big fence and now they can’t spy on you any more, and it’s annoying the hell out of them!) You have to raise your glass to crypto, just for that.
✖ Some of the biggest hoaxes in the investment world have happened in crypto. It’s still quite an ‘underground’ asset – it’s not regulated in the same way other assets are.
✖ Cryptocurrencies are the most ‘volatile’ investment on this list – that is, their value jumps up and down A LOT, and sometimes those jumps are huge. It’s very much a gambler’s market, and I advise beginner investors to stay away from this asset class. It may become a lot more mainstream in the future – but for now, it’s the Wild West.
By investing in assets like these, you’re making the assumption they’ll appreciate in value and become worth more over time – like with most investments. I’ve listed antiques, wines and art here, but lots of assets can fall into this class – including watches, classic cars and stamps.
✔ These types of investments tend to attract ‘subject matter experts’ i.e. people who really know their stuff! If you’re knowledgeable in one of these, you could make a killing.
✔ Like precious metals and property, these are good, old-fashioned tangible assets. You’ll get much more pleasure from these than you would from numbers on a screen! They can be a lot of fun to invest in, and give you great personal satisfaction.
✖ You’re facing big risks if you don’t know the market well. Even with specialist knowledge, there’s no guarantee your investment will appreciate in value.
✖ Like property below, these assets don’t tend to be the most ‘liquid’ i.e. you usually can’t sell them quickly. Their sales are often limited to people with particular tastes. You couldn’t sell a piece of art anywhere near as quickly as you could sell a bar of gold, for example.
Property investing doesn’t really need an introduction – you know the drill. You buy a house, and then you either rent it out to tenants or you do it up and sell it at a profit i.e. ‘house-flipping.’ It’s one of the oldest types of investing out there.
✔ People value land – especially here in the UK. We’re a very small, overpopulated island and for that reason space to build new land is at a premium. So, if you own a property, you’re at an advantage. People will always want to either buy it, or rent it from you.
✔ Another big advantage is family legacy – property is one of the most useful and ‘practical’ assets you can leave behind to your family.
✖ It seems we’ve been stuck in a ‘seller’s market’ since the 2008 crash and property prices are out of reach for a lot of people.
✖ If you are able to get a mortgage on a good property, then you’ve also got to think about the additional elbow grease (and expense) of ‘doing it up’ and ‘selling it on’.
✖ If you’re thinking about renting it out, you’ve got lots of health and safety regs to follow and the potential for tenants to play fun-and-games with the rent they owe you.
✖ It’s also an ‘illiquid’ asset i.e. if you need to sell your investment to raise cash quickly, property definitely isn’t the investment for you.
OK, so putting your money in a pension fund or a savings account (or both) is definitely a form of investing, and it’s probably what you’re doing now.
✔ Cash investment like this is safe – in fact, it’s the safest form of investment there is (well, in terms of it not being an out-and-out gamble). Your cash in the bank is protected by the FSCS up to £85,000, so you don’t have to worry about wild value swings that happen with other investments on this list.
✖ If you’ve got a good workplace pension (where your employer matches your contributions up to a fairly high percentage) then you’re lucky, but some pension contributions – depending on the provider – are very low.
✖ Interest rates on savings accounts are so low these days, your money barely grows. As I mentioned at the start, with inflation standing at 6%, that 2% interest rate your bank is paying on your savings is well behind the rate of inflation. This causes your money to rot and drop in value. Of course, you always have the option of waiting it out and seeing if inflation goes back down, but this is a risky option, in my opinion.
Precious metals – and I’m going to focus on gold here – are ‘commodities’ that are naturally found in the earth. There’s a limited supply of them, and so this makes them valuable. As you know, gold can be made into highly desirable jewellery, and before that it was our country’s legal tender. Even when money was invented, gold was the yardstick its value was measured against – this is where the saying ‘gold standard’ comes from.
✔ I could go on and on, but in a nutshell – commodities like gold are Old Faithful. They’re always desirable, always in demand.
✔ Over time, they’ve continued to grow in value. Their consistency and reliability gives you the kind of peace of mind that stock market gambles can’t. Crypto may be here today and gone today, but the demand for gold will outlive all of us. If you keep steadily investing a good portion of your pension in gold, you’re practically guaranteed to be a lot wealthier than when you started. It’s hard to say that about the other investments on this list.
✔ Gold is very liquid. There are always buyers willing to take it off your hands in a heartbeat.
✔ Like property, gold is a very nice ‘family legacy’ investment. Many cultures keep gold in the family and use it for valuable gifts.
Cons: None! OK, I’m kidding (I just love gold). I’ll admit there are some:
✖ The biggest criticism aimed at gold is that it doesn’t ‘work for you.’ So, whereas with property you can collect rent and with stocks you can earn dividends, gold ‘just sits there’ and doesn’t make any money for you until it’s time to sell it.
NOTE: In fairness, there are lots of other assets that have this drawback too (such as wines, antiques, classic cars, watches etc) so it’s not a problem that’s unique to gold.
✖ Understandably, you may not feel comfortable having something as valuable as gold lying around in your home, so you may need to pay for storage costs (I have some thoughts about this as well, though, that you can read in my guide to investing in gold below).
Well, there’s a reason I left gold as the last option, at lucky number seven.
You see, as many of my Facebook friends already know, I’ve been investing in gold for well over a decade.
I’m a jeweller, after all, and I’ve been a jeweller for over 30 years now.
Just to recap what I said at the start of this article…
I own various companies: two jewellery shops, a pawnbroker’s, a CBD oil business, a clothing line and an online education business.
The MAIN factor in my businesses’ success has been my blood, sweat and tears (everyone reading this knows there’s never a shortcut around these three things).
But, after that, I’d say the other factor in my success has been my gold holdings
You’ll have to decide for yourself, of course – but it doesn’t help that, these days, so many people try to put you off investing in gold.
It’s the most trustworthy, reliable investment out there. It’s stood the test of time, and the people who go around sneering at it, may be the same people who find themselves in a mess one day (when the numbers on their computer screens disappear, due to some market crash or another…)
I do like to think I know what I’m talking about, when it comes to gold... given that I’ve been buying, selling, cleaning, cutting, and soldering the stuff for three decades and counting!
I’ll tell you something else, as well: One of the nicest things that’s come out of my gold investments has been seeing my daughter take an interest in finances and investing.
They love learning about it, and there are much worse things you can teach to your kids and grandkids! It’s win-win, because you benefit in the here and now, and they benefit in the future.
I’m passionate about getting kids interested in finances and investing. I’m not going to be a Debbie Downer on school education – I know teachers work incredibly hard. But I do think financial education is something that’s sorely missing from our kids’ curriculums. I suppose that’s a conversation for another day, though, so I won’t go into it here.
Anyway, that’s my take on gold. It’s looked after me. I’m already well-prepared for retirement, and I’d like other people to be well-prepared, too.
So, with that being said, here’s that free guide again, for anyone who’s curious and fancies a read. All you have to do is pop your name and email address in the form below, and I’ll send you a free copy straight away:
All the benefits of investing in gold seem to be ‘secrets’ these days, because most people have forgotten why this precious metal is the greatest investment of all time (other, newer types of investments have become so popular, it’s understandable how gold became lost in the shuffle).
Help yourself to that free guide. I hope it puts your mind at ease about investing.
If you have any questions about this stuff, feel free to add me on Facebook and reach out to me.
I hope you find this article useful – if I’ve helped you feel less uncertain about investments during this uncertain time, then it’s been well worth the time spent writing it!
Thanks for reading.
Your Friendly Jeweller,