One benefit to working with a fiduciary, instead of a commission-based advisor, is that he or she often uses a margin of safety approach. This means you achieve better diversification of assets because a fiduciary helps you balance your investments. One way to expand your portfolio to reduce risk is by looking into tangible investment assets.
Tangible Assets Retain Value
Tangible assets at their most basic level are items you can touch. They range from precious metals like gold, silver, and platinum to real estate and collectibles. Tangible commodities retain their value, even when the cost of the U.S. dollar decreases. That stability protects investors from factors outside of their control. In contrast, stocks, bonds, and mutual funds are intangible assets, which often create greater risk for investors.
A Low-Risk Investment
Tangible items do not relate to asset class volume like cash, stocks, and bonds do.
Therefore, investing in them provides an ideal way to help reduce portfolio risk. They are considered a low-risk investment, so they provided a safe investment.
A Different Kind of Risk
However, tangible commodities are not full proof as they often present a new type of risk. While they retain their value, other costs may play a role when investing in them, especially when it comes to precious metals and collectibles. Investors may need to store certain assets in a safe or secure area. Extra storage cost is often not taken into consideration when setting prices and selling. That extra cost has the potential to negate income received once investors sell items. Additionally, since tangible investment assets do not provide extra income in the form of interest or dividends, some may not have the extra money upfront. Those that do, may find the process of waiting to buy and sell frustrating.
Look Beyond Market Cost
To overcome the frustration of dealing with extra costs and the uncertainty of knowing when to buy and sell, casual investors should look to a fiduciary no matter where they live. Fiduciaries do not have to meet clients in person, but because they are obligated to work on behalf of their clients no matter what, they reach people who do not live in big cities like Chicago, New York or Los Angeles.