The truth is you’re living in times when the concept of value evolves and changes constantly. According to experts, traditional currencies lose around 2% of their value due to inflation, so investors actually lose money if they keep them in their portfolios. The majority of currencies no longer follow a gold standard, but the systems rely on the government to make good policies and the public to trust the financial system.
However, after a couple of chaotic years, people find it challenging to trust governments and traditional currencies and believe that inflation will make everything worse. Governments have started printing money out of thin air to meet some of the issues they are facing, which has several consequences for traditional currencies.
Having some cash is always a good strategy because it offers increased flexibility when purchasing products and services. Still, in the present economic environment, it’s advisable to add diverse stores of value to one’s investment portfolio.
What is a store of value?
Data shows that stores of value are diverse assets, commodities, or currencies that have a stable or increasing value and don’t depreciate over time. They are great additions to investment portfolios because they retain their financial value in the long run – like Bitcoin, as seen in the bitcoin price chart.
The main attributes of a good store of value are:
It’s important for a store of value to retain its value under all conditions. Before listing the most popular stores of value, it’s best to have a look at the attributes that provide them with this status.
Portable—People are increasingly finding it necessary for a good store of value to be portable so they can easily store and transport it. Bitcoin is considered a good store of value because it is accepted as a digital payment solution and means of exchange, so people can use it to trade assets. Portability is also important because it protects the asset from theft, as the owner can take it with them when travelling.
Verifiable—Investors find it essential to be able to verify the asset’s quality before adding it to their portfolios. It should be easy for everyone to verify that the asset is authentic because it would make it easier for investors to use it for transactions. When the authenticity of a store of value is settled in the market, everyone feels more confident about putting their money into it.
Fungible—Fungibility is the quality of assets that retain their quality during transactions. An asset cannot retain the store of value characteristic if it cannot be transferred.
Divisible—Stores of value should allow denomination and division to allow the owner to trade smaller portions of them. Denomination is also helpful in managing inflation because it allows the store of value to remain the same regardless of where it is used.
Rare—this is another crucial feature for a store of value because it shouldn’t be abundantly available and in large quantity to maintain its high value. Gold and Bitcoin aren’t easy to obtain or abundantly available, so people must make an exchange of value to acquire them.
Most popular stores of value in 2024
Cryptocurrencies
Cryptocurrencies are trending these days since blockchain technology has gained people’s attention. They are created and maintained on blockchains and have financial value, so they can be used as monetary systems. Bitcoin is the most well-known store of value due to its scarcity, denomination, digital security, and increased decentralization. It’s not abundantly available, but anyone who can afford to purchase it can add it to their portfolio. All digital currencies bypass censorship, so they are excellent for transferring value.
Agricultural properties
Real estate has always been considered a store of value, but agriculture has become highly popular over the last few years because it carries great economic value, thinking they are vital for food production. Investors have started to recognize the true value of farmland. It’s one of the most undervalued stores of value available, but considering how scarce of a resource it is, its value will only grow exponentially in the future. However, agricultural properties differ from cryptocurrencies and traditional money because they require extensive maintenance to preserve their value.
Precious metals
Silver and gold are widely used as stores of value because they have a long history of maintaining their prices even during challenging times. People have used precious metals for holding and exchanging value since the oldest times and they power the Gold standard, which is an old financial system that allows the trade of gold for dollars.
Gold, silver and platinum are the most valuable metals because they are permanent and perpetual.
Rare collectibles
Rare items like stamps, cars, artwork, coins, and other similar things are also classified as stores of value. They might not be used widely as cryptocurrencies and precious metals are, but there is definitely a public for them. Their main characteristics are desirability and rarity, increasing their demand. The purchaser often establishes their value and their desire to acquire a particular item. Collectibles have a fixed or increasing value, and their main advantage is a low supply.
Traditional currencies
Money is also defined as a store of value because it can be used for saving and investing. It’s usually used as a medium of exchange and to carry value in transactions. People can add it to their investment portfolios without facing the risk of losing value. It’s also widely used to purchase items and services, and the public considers it the most reliable means to engage in transactions.
Money offers the holder buying power, so investors mainly save money to purchase property or services in the future. Currencies are also universal, so they can be stored, spent, or exchanged without fearing that the holder will lose some of their value. It’s worth noting that traditional currencies are used as a medium of exchange in a particular region or area.
It’s advisable to continuously diversify your portfolio with several types of stores of value because there’s not one golden ticket that ensures profitability.
