Gold has been at the forefront of value and prestige for centuries, which doesn’t mean it’s out of place in the new investments vault. The key ingredient bringing old gold back in a new and improved way is fintech.
Fintech refers to a wide range of new technologies that automate the delivery of financial services. Financial Technology (fintech) seeks to create digital improvements to allow people to move their money and access funds from anywhere in the world, be that at a pay point with touch and go, or online with Afterpay or Bpay options. As well as improving services and making banking more accessible, they also challenge the status quo by offering a wider range of services outside of the big bank structure.
Investments are a big part of the fintech equation. Fintech is responsible for bitcoin, but also a huge number of flexible and safe digital investments, including gold. Not only are digital assets easier to access with fintech, but the technology also removes a lot of the risk, making a wide range of investment portfolios available to entry-level investors.
Gold is a stable asset that can help diversify your investment portfolio. Typically gold moves in the opposite direction to the US dollar (and the stock market in general) making it a great way to balance out your stocks and bonds and hedge your investments.
Financial technologies are definitely the future. According to the Global FinTech Marketplace report in September 2021, fintech industry growth is expected to be 13.7% CAGR, bringing their market up to $190 billion USD by 2026. If the rapid rate of uptake of digital wallets is anything to go by, Fintech popularity is only going to expand as it paves the way to cashless services, with Artificial Intelligence predicted to power 95% of customer interactions in the next decade.
Investing in fintech from anything from everyday banking and grocery payments right through to creating your first investment portfolio will have positive benefits for businesses and consumers, including:
Fintech enables fast turnarounds, everything from instant tap and go from your device to same day loans with digital lenders and instant share and investment transfers can be done in the space of a click (or two). Previously buying a precious metal like gold would require third party evaluations, transfer or transportation, security and storage, selling, with selling also a complex and time-consuming sequence through approved parties. With digital gold investments you can buy and sell instantly, with pre-set values and instant buyers.
- Better Access
Initially, people think of better access for everyday payments and groceries, transferring funds and making secure online purchases, but the scope of fintech accessibility is far greater. From offering banking to people who previously ‘unbanked’ it makes financial access a global right, not a privilege. At the same time shares and investments are now becoming available to a wider range of people, even those without stock experience, with programs that manage portfolio assets through intelligent algorithms, opening safe and secure investments to a wider community cross-section.
5 important things to consider when dealing with fintech
No matter how safe and how easy fintech has made investing, it is still important to carry out research, know what you are investing in and make some careful choices about where to rest your money for long-term growth.
Here are five of the most important things we feel are important for you to consider when you’re looking to invest in fintech.
1. There are different fintech sectors
There are different sectors in the fintech industry that you can choose from including Big Data analytics, Artificial Intelligence and Machine Learning, Robotic Process Automation and Blockchain. These make up the bulk of financial technologies from everyday payment gateways and mobile payments to budgeting apps and consumer banking right through to Robo-Advising and Stock-Trading Apps.
If you are interested in investing in gold there are dedicated apps to buy, transfer, gift and sell real gold that is held in secure vaults.
Notable fintech sectors to look out for to help handle gold investments are blockchain, mobile banking apps (specific to digital gold trade), Robo-Advising and stock-trading apps. These fintech sectors use artificial intelligence, analytics and robotic processes and systems to make buying and trading gold simple and effective.
Blockchain makes online currencies (like crypto) safer and reduces the unknown risks by assigning a genuine value to their ‘coin’. In the case of gold, it can help ensure the digital gold you purchase is pure gold (not impure or fake) and gives you a digital value that is relative to real gold. As well as reducing risks and giving you certainty around your investment for fast decision making, blockchain reduces investment costs and enables fast transactions and improved security.
What to buy and when to sell can be difficult decisions to make as an investor. Robo-Advising makes investment choices for you using intelligent algorithms.
Robo-Advising portfolio management gives you the ability to have a wide-ranging portfolio of investment with very little skill or investment experience. You can also access the service 24/7 so you can check-in when it suits you.
You don’t have to be physically present on the stock exchange floor to buy and sell anymore, thanks to fintech. Apps allow you to buy from anywhere in the world with just a few clicks. As well as making stocks accessible, it also means you can buy and sell more cheaply.
Before you start with your investment, it’s best to take into account your buying needs and investing preferences so you can choose the right fintech company to partner with that will give you the flexibility and capabilities you need for your investment.
2. Each fintech sector offers different opportunities
As well as which fintech sector is the best fit for you and your investment, it’s important to do due diligence on the fintech venture you are considering investing in.
Even with fintech companies being relatively new, there are still ways you can ensure they are trustworthy and safe investment companies.
Look into the following factors of a fintech company before committing to an investment:
- Industry Relevance – Knowing where the company stands in relation to its competitors is important for determining if investing in the business is worthwhile. To determine this, you can conduct an industry analysis report which examines three main elements: the crucial factors that influence a company’s success within the industry; the underlying forces driving the industry; and the overall attractiveness (industry-wide).
- Revenue structure – Before investing you’ll need to learn more about the fintech business’ revenue structure. This will help you know if it’s earning, and assess if they can get a good Return on Investment (ROI) for you.
- Potential for expansion – Investors need to look long-term. What can the business offer you in the years to come. Business growth is positive for long-term returns, providing a greater ability to respond to customer demand as well as the ability to find and take up new opportunities, expand to greater coverage or service offerings so get more for your money as an investor with a bigger customer reach and enhanced services.
Investors need to understand the need to look into these conditions and situations to make a calculated and informed decision about investing.
3. Research cybersecurity measures
There’s no such thing as a risk-free investment venture. Fintech has helped solve many risks and made digital investments transparent and more efficient compared to traditional investments, however, there is a greater risk growing as online hackers see potential in gaining access to do damage or steal online assets or information. This requires extra diligence and care by the fintech companies to have security measures in place that handle any threat.
A quality investment is one where you trust in the company you are investing in and have the online security measures in place to protect your wealth and earrings.
Knowing the risks gives you the ability to research your fintech investment company and make sure they have comprehensive measures to cover them.
The two main risks to consider when investing in fintech are:
- Privacy risks – Customer data has the risk of getting hacked into or being leaked. Most companies have strong security and firewalls to prevent information leaks, but those that do not will be targeted and information taken will be used or sold on to other parties.
- Lack of regulation: fintech is not one company, it’s thousands of startups, each small and flexible, allowing them to move with a lot more flexibility than traditional providers (like banks). Because they are so small and nimble, fintechs have escaped the heavy hand of regulation and set new market trends. For example, where banks need to know every customer detail and verify accounts with multiple IDs and signatures, cryptocurrency-related businesses can have completely anonymous buyers and sellers moving funds with an instant click. While convenient, this lack of regulation and anonymity does come with risks.
You can prepare for the risks involved by choosing a fintech company with a solid track record for cybersecurity.
4. Everything is digital
How digital-ready are you? For many, using technology is second nature, but some people may still need to get a grasp of current technologies to be able to confidently manage and oversee their investment portfolios, even if all you do is peek over your Robo-advisor’s shoulder from time to time.
Since almost all fintech processes and transactions are digital you’ll need to be adept in handling the latest technology and be willing to stay up to date as the technology progresses for your fintech investment.
Fintech has been working to change banking transactions for decades. Starting with ATMs; making money accessible without the hassle of filling in paperwork and using a teller. Even though fintech exploded in popularity recently as a disruptor to the big banks by offering new digital services to eclipse them, banks are actually some of fintech’s biggest customers, employing fintech startups for online banking ups, digital wallets, online money transfer as well as signature verification technology and back-end systems.
Despite its growth in popularity, there are some who prefer traditional methods and avoid financial technology. When asked about their preferences in an S&P Global survey, almost 50% of them stated that they found traditional payment methods easier to use. While it is true that initially learning a new fintech process is more difficult and can cause some anxiety, taking that step to actively learn and understand fintech is all that’s needed to access faster and easier systems.
It makes it all the more important for users and investors to familiarise themselves with the new digital processes and systems so they can maximise the use of fintech programs and move with the times.
5. Gold can be used as an asset
One of the great things about fintech investments is that they are everywhere and give you access to just about anything. That gives you the ability to have a wide-ranging portfolio that can provide returns across a number of different scenarios.
When looking for ways to diversify and balance your investment portfolio, gold is a great choice.
Because gold typically moves in the opposite direction to the US dollars and stocks, gold can be used as an asset to diversify their investment portfolio to give back if things take a slump on the other side, so your overall assets will get a higher return in the long-run.
With rising inflation, gold has been seen to appreciate in value, making it a solid hedge against inflation in the future.
Investing in gold is an ideal safe haven as it’s successfully preserved wealth throughout thousands of generations, whereas paper-denominated currencies have changed dramatically over the years and have come and gone in many countries. This is even more crucial in the current environment of political and economic unrest. Having an asset that can go the distance, no matter what comes next, provides some security and peace of mind for investors.
Fintech makes gold trading more accessible and more economical. You don’t need security, transport, evaluations or expensive vaults to buy and keep gold. Fintech companies, like Goldex, allow investors to trade in physical gold as a liquid asset by connecting buyers and sellers to global traders as well as providing a global price discovery tool.
New opportunities are constantly being created with the rapid development of fintech to help reduce costs, increase transparency, and offer informed choices for investors.
Investing in fintech opens doors to a vast range of stocks, shares, online assets and precious metals.
Gold is a “safe haven” addition to an investment portfolio and can offer stability and long term value, no matter the current or future political or economic environment, just be sure to look into your investment options carefully and choose a proven and trustworthy provider.
For trusted advice on investing in fintech, talk to our team at Nauggets to see how investing in gold can give your investment portfolio flexibility and balance.