This blogpost is mostly long term considerations and focused on (51%) gold, as a long term preservation and diversification. Beware gold is NOT a growth asset

I have done enough (too much?) thinking and discussing on insurance products. This analysis builds on that.

— Different holding periods to realize the partial capital protection
Both gold and insurance are non-growth assets providing reasonable long-term “capital protection”. This partial protection have multiple limitations beyond inflation.

In the “standard” scenario, both require holding power for potentially long period. In special scenarios both can show quick return.

• Insurance , not gold, delivers non-negative return as soon as you die (or TPD).
• Gold , not insurance, can show a positive return depending on market

— current income … (long-horizon consideration?)
gold is hopeless. In fact it has negative yield.

Reliability and credit rating is higher with CPF-life than my other non-work income sources. However, rental income tend to grow.

— windfall appreciation:
annuity is hopeless

In normal to good times, properties are promising. In the long run, U.S. properties outside a few special cities, do NOT show strong appreciation.

In very bad times, gold can appreciate hugely.

— long-horizon inflation risk:
Annuity provides a fixed payout that fears inflation.

Globally, annuity returns usually derive from bonds. As global life expectancy grows, there might be increasing allocation to bonds on the global level. Long bonds fear inflation.

I feel rental and dividend assets are an inflation-hedge but increase credit risk (+market risk)..

Gold is the strongest currency over long horizons.

— long-term wealth preservation esp. through black swan crashes
No “asset” is 100% safe, fire-proof, war-proof, everything-proof. Among them, Gold might be the best, if you find a way to store it safely in the local city, and if liquidity remains high.

In war, cultural revolution or famine, your gold (or any asset for the matter) will not buy you food, medicine or air-tickets !

Gold’s long-term appreciation doesn’t depend on local economy whereas property can fail if the local economy fails. Other investments also pose higher (market, credit, country…) risks over longer horizons.

I have very low (below 1%) allocation to stocks currently but when my allocation grows to 10%, gold hedging may become important.

— high maintenance?
annuity is best; property is worst.
Physical gold requires storage. Perhaps some paper gold can be considered.

— liquidate when you must, in X years?
Insurance is the right asset to liquidate when you have an “acceptable” reason to liquidate such as TPD. You are not subject to the market condition in X years.

If you need to liquidate for some other reason, then all three liquidations can be …. unprofitable, poorly-timed, depending on the X. In this scenario, gold has a better chance of being profitable.

— logistics of liquidating:
gold is way better, but still has limits. Consider war time. Your physical gold (and properties) would be hard to liquidate if you happen to be in the war zone.

— difficulty of holding long term. Nothing new here. See items above

— legacy:
legacy depend on many of the factors above.

Gold is the easiest to inherit, or to manage, by inexperienced family members including my wife.

annuity has a bequest amount, which shrinks as I live longer.