Investors have rushed to buy gold as stock markets around the world crashed. However, historically, gold has been a poor investment to own. As such, FTSE 100 shares might be a better investment for your portfolio today.
FTSE 100 shares on offer
For the 30 years to the beginning of March, the gold price had underperformed the stock market by a factor of three. This tells us that, over the long term, gold underperforms stocks.
This trend doesn’t hold true in times of crisis. As we’ve seen over the past few weeks, when markets plunge, investors rush to buy gold. Nevertheless, if you’re serious about investing for the long term, FTSE 100 shares could be a better buy.
Some of the market’s top blue-chips are now on offer. For example, pharmaceutical giants GlaxoSmithKline and AstraZeneca are dealing at relatively low valuations compared to history.
Even though the coronavirus outbreak has disrupted large swathes of the global economy, healthcare systems have never been busier. Over the long term, this trend should continue. The world’s population is only growing and living longer. That should translate into a growing demand for drugs and treatments over the long run.
As such, Glaxo and Astra look well-placed to continue to earn profits for shareholders.
Other FTSE 100 shares that could be an excellent alternative to gold are utilities. Even though the whole population of the UK is currently stuck in lockdown, we still need access to running water and electricity.
That’s where United Utilities and National Grid come in. These are some of the best run and financed utility businesses in the UK. They also both offer mid-single-digit dividend yields.
As the UK’s population continues to expand, demand for these companies’ services should continue to grow. That will lead to rising profits for shareholders.
Investment trust option
If you can’t pick one company to buy, the Scottish Mortage Investment Trust is another option. Scottish Mortage owns a portfolio of some of the best tech companies in the world. The trust has an excellent track record of picking tech stocks and growing businesses that have the edge over the rest of the market.
As the global technology sector continues to expand, these businesses should do well over the long run. The trust also offers international diversification, which many FTSE 100 shares don’t.Â
Income investments
These FTSE 100 shares could all yield a better return than gold over the long run. A significant advantage of FTSE 100 shares over gold is the fact that they produce an income.
All of the companies above, for example, offer investors a regular dividend. There’s no dividend with gold. Most of the time, investors have to pay to own gold. This can erode returns over time.
Therefore, if you’re looking for a way to protect and grow your wealth for the next 10-20 years, the FTSE 100 shares above seem to be some of the best options on the market right now.