Why We Suggest Real Estate, Small Businesses, and Precious Metals for Long-Term Investments
Welcome back to the Black Guild blog! If you’ve read any of our previous posts, you know we pride ourselves on being contrarian investors. Our approach challenges the traditional narratives around savings and investments, offering insights that empower you to make informed decisions. Today, we’re discussing why real estate, small businesses, and precious metals are our top recommendations for long-term investments and holdings.
This blog aims to break down why these three investment vehicles stand out, how they work, and why they might be better suited for your long-term goals than traditional options like stocks, bonds, or cryptocurrency.
Why These Three?
Conventional wisdom often points investors toward stocks, bonds, and IRAs while encouraging the use of debt to acquire real estate. While there’s value in these strategies, they come with risks and limitations, especially for those new to investing. Our approach focuses on assets that offer stability, control, and tangible value.
Here’s a deep dive into why real estate, small businesses, and precious metals are uniquely positioned to help you build and preserve wealth.
1. Real Estate: A Tangible and Flexible Asset
Real estate has long been one of the most popular investment vehicles, and for good reason—it combines growth potential, income generation, and a hedge against inflation. Unlike stocks or cryptocurrencies, real estate is tangible, offering a level of security and flexibility that paper assets cannot.
Why Real Estate Works
- Supply and Demand Dynamics: Land is finite, and as populations grow, demand for homes, commercial spaces, and agricultural land increases. Properties in high-demand areas tend to appreciate over time, especially when coupled with infrastructure development.
- Multiple Income Streams: Real estate provides dual benefits: appreciation in property value and income from rentals. Creative strategies, like converting single-family homes into multi-tenant properties, can maximize cash flow while maintaining the asset’s growth potential.
- Tax Benefits: Property owners enjoy deductions for expenses like mortgage interest, property taxes, and depreciation. These tax benefits can make real estate an even more attractive option for long-term wealth building.
- Hedge Against Inflation: Real estate values typically rise with inflation. As money supply increases and purchasing power declines, property values adjust, preserving your wealth.
Practical Advice for Real Estate Investors
Start small. Consider purchasing a rental property in an area with a history of stable appreciation. Look at factors like local job growth, schools, and amenities. If managing a property feels overwhelming, explore real estate investment trusts (REITs) to get started with less hands-on involvement.
The Risks
Market crashes, like the 2008 housing crisis, remind us that real estate isn’t without its risks. Additionally, property values are affected by migration patterns and local economic conditions. However, with careful research and a long-term perspective, these risks can be mitigated.
2. Small Businesses: A Scalable Wealth Engine
If you’ve ever dreamed of being your own boss, investing in a small business might be the perfect path. Small businesses offer unparalleled growth potential because they allow you to directly influence outcomes. Unlike stocks, where you’re a passive shareholder, owning a business puts you in control.
Why Small Businesses Work
- High Returns: Small businesses often yield much higher returns than traditional investments because you control key decisions, from hiring to marketing strategies.
- Flexibility: Small businesses can quickly adapt to market trends. For example, during the COVID-19 pandemic, businesses that pivoted to selling personal protective equipment (PPE) reaped significant profits by responding to urgent market demands.
- Tax Advantages: Business expenses are often tax-deductible. Whether it’s purchasing equipment, leasing office space, or traveling for work, these deductions can significantly lower your taxable income.
- Scalability: Unlike real estate, which has physical limitations, businesses can grow exponentially. By reinvesting profits, you can expand your operations, reach new markets, and increase your overall value.
Practical Advice for Aspiring Entrepreneurs
Start with a business that aligns with your skills and passions. Focus on solving a specific problem in the market. For example, if you notice a lack of affordable childcare services in your area, you could create a business that fills this gap. Consider starting small, testing your ideas, and reinvesting profits to scale.
The Risks
Running a small business is demanding. It requires time, effort, and capital. Not all businesses succeed, and failure can result in significant losses. That said, the rewards often outweigh the risks for those willing to put in the work.
3. Precious Metals: The Ultimate Store of Value
At Black Guild, we don’t necessarily view precious metals as investments in the traditional sense. Instead, we see them as a reliable hedge against inflation and a means of storing value—essentially a safe way to preserve your capital over time.
Precious metals like gold, silver, and palladium are particularly valuable in uncertain economic climates. They serve as a safeguard for your wealth when fiat currencies lose value due to inflation or other economic pressures.
Why Precious Metals Work
- Hedge Against Inflation: Precious metals maintain their value as paper currencies decline. When fiat money loses purchasing power, the value of gold and silver typically rises, helping you preserve the real value of your holdings.
- Limited Supply: Gold and silver are finite resources, unlike fiat money, which can be printed endlessly. This scarcity adds to their long-term value.
- Global Liquidity: Precious metals are universally recognized, making them easy to liquidate in virtually any country. Their prices are agreed upon worldwide, creating stability regardless of where you are.
- No Counterparty Risk: When you own physical gold or silver, it belongs solely to you. Unlike real estate, which depends on local governments and tax systems, precious metals are free from external claims. If you hold it, you own it.
How to Use Precious Metals
We see precious metals primarily as a holding rather than an investment. If you have savings you don’t plan to use for six to twelve months, converting that money into gold or silver can protect its value. These assets are especially useful for storing liquid wealth that can be accessed quickly when needed.
Additionally, gold and silver’s role in technology—such as electronics and renewable energy components—keeps demand high, further solidifying their position as valuable long-term holdings.
Why We Love Gold Over Other Assets
Gold’s unique characteristic as a store of value makes it unparalleled. Unlike real estate, which carries counterparty risks (like property taxes or potential confiscation for unpaid debts), physical gold is entirely under your control. It’s stable, portable, and universally respected.
For these reasons, we strongly suggest using precious metals as a savings tool. Whether you’re safeguarding short-term liquidity or building a reserve for future opportunities, precious metals offer unmatched security and reliability.
If you’re wondering where to start, consider reputable dealers like Summit Metals, which provides competitive pricing closer to market spot rates. Owning even a small amount of gold or silver can be a powerful first step in diversifying your financial strategy.
Why Not Stocks, Bonds, or Cryptocurrencies?
At Black Guild, we’ve discussed at length why we prefer real estate, small businesses, and precious metals as the foundation for long-term wealth building. But you might be wondering: why not stocks, bonds, or cryptocurrencies? While these options are popular, we believe they come with risks and limitations that make them less suitable for long-term investing, particularly for novice investors.
Stocks and Bonds
The primary issue with stocks and bonds is the counterparty risk involved. When you invest in these assets, you’re essentially relying on the perceived or reported value of a business or institution that you don’t control. This lack of transparency can leave you vulnerable.
For example, while audited financial statements are often provided, there have been numerous instances where companies or their auditors were found to be fraudulent. Such situations can result in significant losses for investors. If you lack the ability to analyze financial statements and identify red flags, you’re essentially speculating rather than investing.
Additionally, the performance of stocks and bonds is tied to external factors like market sentiment, interest rates, and global economic conditions—factors outside of your direct influence. For someone without deep expertise in financial markets, this can feel like gambling rather than strategic investing.
Cryptocurrencies
Cryptocurrencies, while innovative and promising, are fundamentally speculative and highly volatile. While they may one day serve as a viable fiat alternative, they currently lack the stability and intrinsic value of tangible assets like real estate or gold.
One of the most significant issues with cryptocurrencies is their reliance on complex systems. Blockchain technology, energy-intensive mining processes, and digital wallet infrastructure all create counterparty risk. If any of these systems fail, the value of your cryptocurrency could vanish.
Additionally, cryptocurrencies lack a universally agreed-upon value. Unlike gold, which has been used as a form of money for thousands of years, cryptocurrency values are based largely on speculation and market trends. The extreme volatility makes them unsuitable for long-term holdings.
Speculation vs. Investment
At Black Guild, we’re not entirely against speculation—there’s a place for it in any portfolio. However, we believe in being clear about the difference between speculation and investment. Investments should be based on knowledge, transparency, and a high probability of achieving a specific goal. Speculation, on the other hand, involves greater risk and often less certainty.
With stocks, bonds, and cryptocurrencies, you’re often placing bets on factors you can’t directly control or fully understand. This is why we prefer assets like real estate, small businesses, and precious metals, which offer tangible value, transparency, and control.
In Summary
While stocks, bonds, and cryptocurrencies have their place in modern finance, their reliance on speculation and external systems makes them less appealing for long-term wealth building. At Black Guild, we prioritize investments that align with our principles of stability, control, and transparency.
If you’re considering these more traditional or trendy investment options, we recommend focusing on short-term strategies or gaining extensive knowledge in these fields before diving in. For long-term success, stick with assets you can trust and control.
Final Thoughts: Knowledge is Key
If you’re just starting your investment journey, don’t try to master all three asset classes at once. Pick one—real estate, small business, or precious metals—and become an expert in that area. Over time, you’ll build the skills and confidence to diversify.
Before you begin investing:
- Build a solid budget.
- Create an emergency fund for unexpected expenses.
- Assess your risk tolerance and investment goals.
At Black Guild, we believe in empowering individuals to take control of their financial futures. By focusing on assets that offer stability, transparency, and control, you can reduce stress and maximize success.
We’d love to hear your thoughts! Are you investing in real estate, small businesses, or precious metals? Share your experiences in the comments below.
