EG Column | How to build an investment portfolio?

If the user bought 100 grams of gold at US$66.2/g, the total cost would amount to US$6,620. However, in the event where the gold price drops to US$62.2/g, users are advised not to sell immediately when gold price falls. This is because even though gold prices fluctuate from time to time, but the prices are still rising as a whole in the long run.

Users should continue buying gold to build an investment portfolio and set aside contingency funds when they invest, so as to open a position when gold prices fall. In this case scenario, the user should continue to buy another 100 grams of gold, amounting to US$6220.

Here is an example to illustrate the profit-loss margin:

 Profit & Loss  
Gold Price US$)For the gold bought @ US$66.2/gFor the gold bought @ US$62.2/gInvestment Portfolio (US$)
When gold price rebound to 63.26320-6620=-3006320-6220=100-200
When gold price rebound to 64.26420-6620=-2006420-6220=2000
When gold price rebound to 65.26520-6620=-1006520-6220=300200
When gold price rebound to 66.26620-6620=06620-6220=400400

The table above shows that if the user decides to sell the gold hastily after the price falls to US$62.2/g, the user would have suffered a loss of US$400 immediately (US$6220- US$6620= -US$400). On the other hand, if the user follows the investment portfolio strategy illustrated above, the user will be able to make a profit of US$400 when the gold price rebounds.

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