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Many of the gifts we give our children have a short shelf life. From smartphones being replaced on an annual basis to short-lived fashion flies like fidget spinners. It can be difficult, for parents to predict what will last and what will collect dust. Therefore, some parents prefer to use their extra funds to secure their children’s financial future in bank savings, funds, and shares. However, as interest rates get lower and lower, traditional savings accounts do not seem worth the trouble. At the same time, the stock market can be volatile and risky. Classic investment options for children are simply not what they used to be. That’s why at Tavex, we suggest you invest in your children by giving them the gift of Gold.
Gold is a safe-haven asset, with a proven history of growth and a perfect way to generate wealth for your children without risking their future in a volatile market. For the fact that most gold investors tend to be older, giving your child the opportunity to enter the gold market at a younger age will allow them to reap more benefits than the regular gold beetle. This is because they tend not to need the initial benefit of the investment until a longer later date in time. Allowing the investment to grow.
Let’s start by looking at the potential growth of gold. The chairman of the mining company Franco-Nevada, Pierre Lassonde, has been predicting a bright future for the yellow metal for several years. Specifically, he has stated that he believes the Dow’s ratio to gold could rise from anywhere from 2:1 to 7:1 over the next five years.
By comparison, the Dow’s to gold ratio is currently just under 19:1. This leads to a potential increase in the spot price of gold from today’s approximately $ 1,500 to a possible $ 12,500. This means that now is the perfect time to start investing in the future of gold.
Just look at 30-year data. According to Macrotrends, the price of gold has jumped from about $ 400 per ounce to $ 1,800 per ounce over the past 30 years, more than tripling in value. Even taking inflation into account, $ 400 in 1990 should only be worth $ 850 in 2019.
If this growth rate increases, it means that $ 1,841 invested would now return around $ 5,625 by 2050, note that these numbers are at the bottom of Lassonde’s estimates. Let’s assume a more optimistic approach, a 2:1 Dow-to-Gold ratio would mean that $ 1,000 invested in an infant’s name would now be $ 8,300 when the infant turns 30years, and a $ 20,000 invested would generate a $ 166,000 investment growth.
There are three main reasons why Lassonde is so optimistic about the future of gold.
To go into detail, Lassonde said that “Central banks have gone from selling over 400 tones of gold per year to buying over 600 tones of gold per year.” He clarified that when they buy, you also want to buy. He also explained that holdings of gold ETFs have climbed from 0 to 3,500 tones over the past 18 years, and if competing assets in safe havens such as European government bonds continue to yield negative interest rates, he sees the trend continue.
Finally, he pointed out how China and India have grown from owning 10 percent of total gold demand in 1989 to 53 percent of it now. As their GDP continues to rise, he also sees that trend will continue.
Let’s then look at the versatility of gold investing. While a large gold ingot can be a great way to start your child’s investment account, many classic savings account strategies for creating a future fund for a child suggest that you invest continuously in the account to increase returns over time.
Say you want to add a little over a troy ounce of gold a year to your child’s physical gold collection. By the time the child is 18, you will have 18 physical troy ounces of gold bars. We at Tavex AB offer many options for buying gold. This means that even a purchase of a 1/10 troy ounce per month can add SEK 20,000 per year in value to your child’s savings per year, and this is without considering the potential growth in the gold World market value.
Using the example from before, imagine that the parent who started the infant’s gold investment has bought 1/10 troy ounce of gold every month for 30 years. Applying Lassonde’s most optimistic growth rate principle means that the investment will yield a return of half a million dollars or SEK 4,600,000 at the end of 30 years span of that infant.
Suggested investment start product for your child or grandchild
Even if such a return requires continued investment, it will give a better advantage to start investing when your child is young. The benefits of investing from an early age when your child is younger is that:
Finally, investing in your children’s finances while they are young can help them learn the value of money. Saving in gold could serve as an opportunity to teach them to understand how assets work. This is in terms that a child can understand and help them take the step up when they reach adulthood. If you engage your child and guide them through the process of saving, it will be less of saving, and more of an investment journey you make together to build good financial habits.
Secondly, it is a way to create an emotional and mental connection with your child as you teach them and discuss things related to the investment. Just like when you help them with homework, extra curriculum activities, or support in a relationship
Tavex is here to help you take that investment journey with your child, grandchild, or another young relative. Tavex offers the lowest premiums on the market, which means that your child can get the most out of the investments later on in life. If you will like to speak to a specialist or ask any question regarding a specific product you are interested in, you can book a free consultation here.
Disclaimer: This article is for informational purposes only and is not intended as an investment analysis or recommendation to sell or buy commodities. Tavex is not responsible for decisions made on the basis of this information. Investments are associated with opportunities and risks, and the market value of raw materials can both increase and decrease. Past or future returns on commodities and financial ratios shown above do not imply any promise or indication of future earnings.