COVER BY INSURANCE

How can I insure against losses? The best “insurance” strategy is to (1) buy and hold while (2) diversifying your assets. This means to buy a wide range of assets representative of the whole range of the economy, both foreign and domestic, and to not buy and sell as individual stocks do well but to avoid fees by just holding the stocks for the long haul. This helps to insure against the risk that a particular company, country, or asset class does badly. However, it has limits: what happens if the entire economy does badly, like during a recession? One option is to buy a “put option”. Buying a put means you are entering a contract with another investor or firm that says that you have the right to sell them a particular asset on a particular future date at a pre-set price. So if you buy an Apple share at $700, you can buy a put at $600 for a particular future date and this means that, if Apple drops to $400 that you can still recover most of your money by reselling it at $600. Quite ...

Can You Buy Insurance To Protect Your Investment? There are several ways you can protect yourself against market declines with “insurance”. The question is should you buy this kind of coverage and if so what is the best method to do so? As I hinted above, you can protect yourself from nasty stock market spills in any number of ways. Of course one option is to keep your money in cash. If you do that, you never have to worry about the market. You may have other problems that are far worse of course, like never being able to retire.  But at least stock market declines won’t keep you up at night. Other than parking your money in cash, there are two popular alternatives that some investors use to protect themselves against the downside of investing in the stock market. The Federal Deposit Insurance Corporation (FCIC), which sums up its main job: to insure your deposits. It does this not by charging you premiums like with your other insurance policies, but by charging the banks that...

Gold  From Insurance To Investment You need to invest your money to make it grow and also insure it to protect yourself against any economic crisis.  The two key pillars of any financial portfolio are investment and insurance. While the reputation of gold as insurance is well established, gold has also proved itself as a lucrative investment asset that yields returns even in strong economic times. We can see that gold has outperformed some of the most fruitful investment assets in the past. Gold’s value in the long term is supported by economic growth. Not only does it act as a hedge against inflation, it also provides unbeatable returns over the long term. Unlike other asset classes, the value of gold transcends geographical boundaries and sovereign currencies. It is easily available and transparent, and yet provides better liquidity than any other asset. Buying and selling of gold has taken various forms these days. Apart from physical gold, gold  Exchange Traded Funds ...

  Gold as insurance Insurance of any form is supposed to protect you by mitigating the damage caused by any unforeseen crisis. And for your financial portfolio, gold does exactly that. Given its low correlation with major asset classes like stocks and bonds, gold tends to perform well during an economic crisis. Take the stock market crash of 2018, for instance. During this time, investors found shelter in their gold investments. It compensated for their losses and provided them with liquidity. Even during times of inflation, when prices are at their highest, gold acts as a safety net for investors. Given its limited supply and intrinsic value, the demand for gold never goes down, and neither does its price. Not just that; investors also use gold as a hedge against currency depreciation. When the dollar gets weak, gold tends to get more expensive. Hence, people turn to gold as a haven when paper currency seems to be under threat. Historically speaking, when currencies are demonetise...