Investing in gold or real estate ?

Life insurance is the preferred investment of the French. However, gold has serious advantages and allows you to protect your funds during periods of crisis.

How is the price of gold set ?

Twice a day, the London Bullion Market Association sets the price of gold. It is based on global supply and demand, and makes it possible to determine the spot price of physical gold (an ounce of gold, equivalent to 31.10 grams) to satisfy a maximum of exchanges. It is therefore a snapshot, at a precise moment, of the global gold metal market.

The supply being constant throughout the year, it is the demand which causes the cost to vary. Indeed, the precious metal is used in jewelry as well as in industry and investment.

Protection against inflation

The price of gold is entirely independent of the stock market, making it a safe haven for many investors. Indeed, the stock market is subject to global economic and financial vagaries and geopolitical crises, which cause rises and falls in different stocks and indices.

Moreover, central banks can create money, and the value of notes and coins decreases as a result: this is inflation. This monetary devaluation impacts the daily lives of populations, who will then pay more for products. Gold is outside of this financial system. It remains stable over the long term, protecting your assets.

Investing in physical gold

There are several possibilities for investing in gold, including the direct purchase of coins (Napoleon francs in particular) or ingots. These objects are made from pure 24-carat gold and are the main vector of protection against inflation. Thus, you hold your capital directly, without a banking intermediary or insurance company. You can therefore buy:

• gold bars  or  gold bars  (less than 500 grams);
• gold coins  (investment or collectible, depending on the item criteria).

On the other hand, the taxation linked to the purchase and holding of gold is interesting. There is no VAT upon acquisition and the resale terms are simple.

Investing in paper gold

Paper gold, also called a “derivative product”, allows you to invest in gold indirectly. Indeed, instead of buying a solid gold bar, the investment then concerns the shares of gold companies, trackers or ETFs. It can also be done when acquiring FCP or SICAV shares. Unlike its physical counterpart, paper gold is more volatile, which offers greater profitability.

Buying, holding and reselling gold can be full of surprises. This is why investing in gold must be done in a reasoned manner, and accompanied by professionals.

Limited profits

Investing in gold can meet different objectives. If the security of your capital is the priority, buying  physical gold may be a good option. However, you will not be able to benefit from it. Indeed, unlike life insurance or other investments invested partly or entirely in the stock market, the interest is almost zero.

Paper gold has the advantage of being more fluid, but remains below the potential profits generated by more traditional investments. Paper gold is indexed to gold and the companies that work in this sector, which reduces financial performance.

Risks linked to paper gold

Diversifying your portfolio can include paper gold. However, the purchase of shares, ETFs or trackers is generally accompanied by management fees, which can be high depending on the financial partner chosen. Furthermore, any action is dependent on the company and therefore on the reliability of the issuer. In the event of a major crisis, you are not protected from filing for bankruptcy or ceasing your activity. Finally, the international stock market is based on the dollar. The reference American currency also has a rate, which can cause you to lose money in the event of a change.

Storage of physical gold

The purchase of physical gold is conditional on its storage. In fact, a 50 gram gold ingot does not take up the same space as ten one kilo ingots. This is why you must anticipate and provide a secure location, protected from bad weather and dust. Thus, bullion holders turn to bank safes or private companies that offer security services. On the other hand, you must avoid handling gold coins and bars as much as possible, at the risk of losing the value of your objects.

Real estate investment meets long-term objectives, and offers numerous financial and tax advantages.

Building a heritage

Purchasing real estate allows you to build assets that you can pass on to your heirs, directly or via an SCI. You can thus purchase several homes in different cities, to diversify your investment and reduce financial risks.

Moreover, to optimize your investments, you have the possibility of calling on a financial institution, which is not possible when purchasing a stock market share. Credits allow you to benefit from leverage, to reduce your monthly financial commitment.

Generate additional income

Renting out a property allows you to receive rent each month. If you opt for credit financing, you can repay part or all of the monthly payments through rent. If you buy cash, you immediately generate profits. Whether for retirement or to increase your income, real estate offers a sustainable solution to supplement your salary.

On the other hand, owning several rented homes allows you to multiply your sources of income. Thus, you have the possibility of reinvesting this money in other real estate projects.

Tax exemption solutions

Rent bare or furnished, the tax administration allows you to benefit from standard or real deductions. Depending on the type of accommodation and its rental conditions, the income generated is not taken into account in full. In addition, certain expenses are deductible (property tax, interest, etc.).)

In addition, you can invest in Pinel, LMNP, Censi-Bouvard schemes which grant tax reductions, under conditions. It’s a way to build wealth at low cost.

Investing in rental property represents a risk. Operating costs, contributions, unpaid bills or even work, are all factors that can reduce your performance.

The contribution

Cash purchasing is the ideal solution to generate income immediately. However, the purchase price of real estate can be high and recourse to a bank may be necessary. In this case, the bank advisor requests a contribution (generally 20% of the price of the property). However, the higher the contribution, the greater the chances that the bank will follow you. Indeed, it is a way of reassuring the creditor establishment and showing the financial solidity of your project.

Rental holidays

Once the property is put on the rental property market, you must find a tenant. Depending on the services, the location, the rent and the local market, the actual rental of the accommodation may take time. This rental vacancy is expensive, since it is then up to you to cover all of the related costs.

Moreover, unpaid debts also represent a risk that must be anticipated, to avoid having to bear excessively heavy charges.

Maintenance and management costs

Rental investment generates maintenance and management costs which are as follows:

• Condominium trustee;
• Cleaning, routine maintenance;
• Taxes;
• Management fees: real estate agency or other professionals;
• Works: roof, windows, insulation.

In addition, the new laws require owners to renovate rental housing, to avoid poorly insulated apartments and houses. If the work is not carried out, you can no longer rent out your property.

These different costs can therefore affect your performance and cause financial losses in the short or long term. 

Resale

You want to sell your apartment ? You must take into account:

• The local real estate market;
• Sales prices;
• Current credits: if you still have due dates, the sale must at least cover them.

Resale does not necessarily result in added value. On the contrary, you can sell at a loss. 

At Gold Union, we offer you a wide range of gold or silver products. Ingots, ingots or coins, our Gold Union advisors are waiting for you in an agency or on our e-commerce site to present investment solutions, adapted to your needs and desires.