AD - this post is a paid collaboration with TallyMoney. This post is for educational purposes and should not be considered as advice. As with all investments, the value can go up or down and your capital is at risk.
What do you think of when you hear the word ‘investing’? Stocks and shares? Well, you wouldn’t be wrong. According to Finder, almost one in five (18%) people own stocks and shares. But, did you know gold is also an option for investment? And a popular one, too! Data from The Royal Mint shows that almost one in four investors (23%) plan to invest in gold over the next few years.
So, if you are in the 23% of people looking to invest in gold, this article is for you. We have partnered with TallyMoney to delve into the ins and outs of investing in gold.
You may be thinking ‘what is TallyMoney?’
TallyMoney is a digital platform that offers a unique approach to saving and investing. Traditional banks often use ‘fiat money’ a.k.a government-issued currency with no intrinsic value. This can cause problems, especially when the supply of money increases and the value of fiat currency (such as pounds, euros or dollars) falls. However, TallyMoney is different. TallyMoney introduces us to ‘commodity money’, where the value of the money is derived from the asset it is backed by. In the case of TallyMoney that asset is gold. So, for every unit of currency issued by TallyMoney, there is an equivalent amount of gold held.
But how does this provide financial security and stability?
To understand this, we need to understand what exactly gold-backed currency is.
Gold-backed currency is a relatively new kind of investment where physical gold is stored and insured remotely on the investor’s behalf and then represented in an electronic money account as a currency. Whilst this kind of investment is new, the use of gold as money is not. Gold coins were first used on the order of King Croesus of Lydia (an area that is now part of Turkey) around 550 BC. Gold-backed currency was commonly used in the past but has largely been replaced by fiat currency such as the pound or dollar.
However, holding gold comes with a number of benefits:
Over the years, gold has outperformed the rate at which prices for goods and services rise (even in times of crisis). According to The World Gold Council, the value of gold has increased by over 600% in the last 20 years alone. So, as the cost of living climbs, someone who is savvy with their money doesn’t want to risk losing value in ‘real’ terms. A savvy person understands that rising prices mean savings will gradually buy less and less. So, they look to invest in different assets or commodities, such as gold to help stop money from being eroded by inflation.
Unlike the stock market, history shows that gold is typically unaffected by significant peaks and dips. History also shows that the performance for gold has been solid. Gold hasn’t dipped below £1000 per ounce in 10 years. 2019 was a great year for record-high prices in the UK, hitting over £1,200 per ounce.
Gold is a great way to diversify and balance an investment portfolio.
So, the next question is…how does investing in gold work?
Whilst there are a number of ways to invest in gold such as buying physical gold, exchange traded funds and gold mining stocks, we are going to focus on gold-backed currency.
Investing in a gold-backed currency using TallyMoney is relatively straightforward. When an investor chooses they want to invest in gold-backed currency, they may decide to deposit £1000 into a TallyMoney Account. That £1000 is then used to purchase the customer’s gold at the global wholesale rate. The customer’s gold is then denominated in an online account as ‘tally’, with every one tally in a customer’s account, representing one milligram of physical gold the customer owns. TallyMoney takes the stress out of investing in gold as the investor doesn’t need to worry about the logistics of storing the gold themselves. And there’s even better peace of mind knowing that the gold is independently audited, insured, and stored by Brink's Global Services, a leading global security and logistics company.
As the value of gold fluctuates, so does the value of tally. One thing to note is that gold does not produce a regular income (like a dividend). To realise any gains, investors typically need to sell their gold. However, because Tally monetises your gold, realising any gains or “selling” your investment is super easy! You can either withdraw the cash straight out of an ATM or transfer the funds from your TallyMoney Account into your regular bank account.
What if I want to spend the money now?
Usually when you invest in stocks and shares and sell your investments, it can typically take a few days before you are able to actively spend your money. However, one of the key features of TallyMoney is its ability to allow investors to spend their returns instantly. Investors are given a TallyMoney Debit Mastercard, which acts in the same way as any normal debit card. This allows users to have quick access to their funds and have the freedom to spend their gold any time, anywhere using the Tally Card.
Are there any drawbacks?
Whilst TallyMoney offers many benefits, there are some things to watch out for, including:
There is a one-off £19 account activation fee that gives you access to an Everyday Account with an individual IBAN, a Debit Mastercard, and the technology required to turn physical gold into digital cash. There’s also an account-keeping fee of 0.9% per annum (calculated daily, charged monthly) to cover storage, insurance and operational costs. Then after that no fees - no withdrawal fees, no transaction fees, and no foreign exchange markups when spending tally abroad!
While TallyMoney offers many features, it may not have all the functionality of traditional banks.
Let’s not beat around the bush. Investing is a risk. While TallyMoney's gold-backed currency can provide financial security and stability over the long run, market volatility can still impact the value of the currency on a day-to-day basis.
Like any other account issued dealing with electronic money, TallyMoney accounts are not covered by the Financial Services Compensation Scheme, but the gold is stored in a secure vault in Zurich, Switzerland, where it is 100% insured and protected. TallyMoney also provides uncapped balance protection (not limited to £85,000) via a trustee agreement,which means if TallyMoney ever closed, all customer gold would be sold and the fiat value of each account would be automatically returned to the customer’s nominated bank account less a 1% fee to facilitate the agreement.
Anything else I should know?
Our goal at Fempire Finance is to educate the masses on all things money and investments (including gold). TallyMoney is not just your average e-money account, the company is also passionate about promoting financial education and helping customers to make informed decisions about their finances. The platform offers lots of blog posts and resources to help people understand their finances and make better financial decisions.
Sold on gold?
We’ve seen game changers that transform the way we manage our money. But have we seen a platform that allows users to invest in and spend gold-backed currency so easily? TallyMoney offers a unique and secure approach to investing with its gold-backed currency and quick access to funds. While there are some things to watch out for, it could be a great option for someone who wants to learn more about investing in commodities.
Getting started with TallyMoney is easy. If you want to try it out, the TallyMoney App can be downloaded from the App Store or Google Play Store. Simply apply for an account and once approved, pay the one-off £19 account activation fee to start saving in solid gold! Use code FEMPIRE200 to get 200 free tally (worth just over £10, at the time of writing this article) once your account activation fee has been paid.
Stay Golden,
Fempire Finance