Non-Correlated assets and Investment Diversification

Posted - May 10, 2023
Non-Correlated assets and Investment Diversification

What is a Non-Correlated Asset?

Diversifying your portfolio with a variety of different asset types is the best way to secure your financial future. Gold, silver, and other bullion investments are considered non-correlated assets. This means that the value of your precious metal investments are not directly tied to the performance of the traditional stock market. 

During questionable or insecure economic conditions, non-correlated assets offer substantial protection against the wild fluctuation of the market. Even inflation might not be able to touch your non-correlated gold, silver, or platinum investments, making them an excellent way to expand your portfolio and fight back against global financial crisis. 

Today, we’re discussing the various ways non-correlated assets in the form of precious metals can improve the quality and safety of your long-term investment portfolio. Hopefully, you can use this information to become more informed about how to craft an effective, secure investment portfolio. 

Is it a Good Time to Diversify Your Portfolio with Non-Correlated Assets?

There’s no better time than now to consider investing in non-correlated assets. To diversify your portfolio is to better secure it with a wider range of investments that allow for more fluidity during tougher economic times. This is a mantra among most investment advisors. An example of a non-correlated asset would be real estate. But is real estate really where you want to put your money during the uncertain financial times ahead of us? 

Real estate is a time-honored investment tradition. As a non-correlated asset, real estate tends to do well – even when the stock market flounders. However, there’s another non-correlated investment with a history that extends even further than modern real estate. We’re talking, of course, about bullion products. Gold and silver have been used to store wealth for thousands of years – and with good reason. Even the most troubling periods of economic history have been dominated by investors whose faith in bullion helped shield them to economic insecurity and strife. 

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Gold and other precious metals are good choices as non-correlated assets. Overall, precious metals have an lower correlation to the market than real estate, so it works well as an investment in both secure and volatile times. In fact, many investors often choose gold as a reliable hedge against market volatility. The intrinsic value of gold bullion makes it one of the most popular non-correlated assets available to investors. 

Another easy example of a non-correlated asset would be a collectible such as a coin or actual art. Over time, these assets can generate some very real value both on a personal level and in the traditional marketplace. These are a few examples of how you can properly diversify your portfolio with non-correlated assets.

Correlated vs Non-Correlated Assets

Ultimately, the market is a bit of a gamble. But you can take steps to mitigate the effects of chance on your portfolio by diversifying using non-correlated assets. It’s hard to avoid correlated assets when building a modern portfolio. After all, low and high-risk stocks are foundational to current investment advice. Diversifying your investment portfolio means deliberately taking steps to add different kinds of investments into your holdings. Putting your money on silver coins or bars is a fantastic way to take at least a bit of the risk out of your portfolio. 

This is not to say that there aren’t any risks associated with non-correlated assets. There are liquidity risk issues that come with owning real estate, precious metals, commodities, collectibles or art. Simply put, an investor might not always be able to secure a buyer for non-correlated assets when they want to finally sell. 

This being said, if your want is to diversify your investment portfolio, it’s a good time to do your due diligence. Look into and research the benefits of non-correlated assets. A little homework up front will better prepare you for what is expected as it comes to buying and selling in the non-correlated asset space. 

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Hero Bullion provides an environment that is informative and safe for those looking to own physical gold and silver bullion as an investment. We love helping folks at all stages throughout their bullion journey making progress towards acheiving their financial goals. Whether you are a seasoned bullion investor or brand new to the game of gold and silver bullion ownership, we're here to help and serve you in any way we can.