In the coming years, many experts believe that physical assets will become more and more important as an investment. This is in part due to the current market volatility, but also because of other factors such as the rise of digital currencies and the increasing importance of sustainable resources.
Physical assets like property and commodities have always been seen as a safe investment, but in recent years there has been an increase in interest from both institutional and retail investors. Here we will explore some of the reasons why physical assets may be a wise investment choice in 2023 and beyond.
What are physical assets?
Physical assets are any type of asset that has a physical form. This includes commodities, precious metals, real estate, and even art. Physical assets are often seen as a safe investment because they can be traded or sold for cash if needed, but they also have the potential to appreciate over time.
Physical assets are one of the oldest forms of investment, but in recent years there has been a renewed interest in these types of assets. The biggest reason would be the market volatility.
What are the benefits of investing in physical assets?
There are many benefits to investing in physical assets here are some of the main ones:
1. They are a safe investment
Physical assets are often seen as a safe investment because they can be sold or traded for cash if needed. This is especially true in times of economic uncertainty when other investments, such as stocks and bonds, maybe more volatile. Physical assets are known for their high returns even in tough market conditions.
2. They are a hedge against inflation
Physical assets are often seen as a hedge against inflation because they usually increase in value when the cost of living goes up. This is because, as the cost of living increases, so does the price of physical assets. So if you own physical assets, you are likely to see your investment grow in value over time.
3. They are a hedge against currency devaluation
Physical assets are also seen as a hedge against currency devaluation. This is because, if the value of a currency decreases, the price of physical assets usually increases. This is because people will want to buy physical assets with a currency that has a higher value.
4. They are sustainable
Sustainable resources are becoming increasingly important as the world moves towards a more environmentally-friendly future. Physical assets such as renewable energy, water resources, and farmland are seen as sustainable investments because they will be in demand in the future.
5. Options for the beneficiary and estate planning
One of the benefits of investing in physical assets is that they can be used for the beneficiary and estate planning. This means that you can leave your assets to your beneficiaries in the event of your death. Physical assets can also be used to create a trust or foundation which can help to lower your tax liability.
6. You can physically see and touch them
One of the benefits of investing in physical assets is that you can see and touch them. This is unlike other investments such as stocks and bonds which are intangible. For some people, it can be reassuring to know that their investment is something that they can physically see and touch. It gives a sense of security.
7. They are always in demand
Physical assets are always in demand because people will always need them. This is unlike other investments such as stocks and bonds which can be impacted by economic factors. Physical assets are always going to be needed, no matter what the economic conditions are.
What are some of the risks of investing in physical assets?
Everything good comes with a price and so do physical assets. Although physical assets offer a lot of benefits, there are also some risks associated with them
1. They can be stolen or destroyed
One of the risks of investing in physical assets is that they can be stolen or destroyed. This is a risk that you take when you invest in any physical asset. However, there are some measures that you can take to protect your investment such as insurance.
2. Initial investment is very high
You can buy a stock for under $10 but you will have to pay a lot more for a physical asset. This is because physical assets are usually worth more than stocks and bonds. So, if you are looking to invest in physical assets, you will need to have a lot of money to start with.
3. Liquidity issues
If you are looking for money for emergencies then you should not invest in physical assets because it can be difficult to sell them quickly. It can take weeks or even months to find a buyer for your physical asset. On the other hand, stocks and mutual funds can be sold almost instantly.
4. They can be difficult to manage
Another issue that you might face when investing in physical assets is that they can be difficult to manage. This is because you will need to find a place to store your asset and you will also need to keep track of it. If you are not careful, your physical assets could get lost or stolen5. You need to be an expert to invest in them
So should you invest in physical assets in 2023?
The answer is, yes, you should. The benefits are greater than the risks and if you are careful with your investment, you can make a lot of money. The best idea would be to diversify your investment portfolio and include both physical and intangible assets. This way, you will be able to reduce your risk while still earning a good return on your investment.
In this article, we've talked about some of the reasons why you should invest in physical assets in 2023. We've also looked at some of the risks associated with this type of investment. Ultimately, the decision is up to you but we believe that investing in physical assets is a good idea. Make sure to do your research and then make a decision that is best for you.