If you’re a beginner investor, you may feel overwhelmed by all the options that are available to you.
What is the best gold to buy?
Where should I invest?
What are the benefits of investing in gold?
Before you decide to make any important decisions with your money as a new investor, you may want to consider this: What Does it Mean to Invest in Gold?
What Should I Invest in Gold?
If you ask a group of industry experts why you should invest in gold, you’ll likely get a variety of answers. What it boils down to, though, is gold is a way to invest that protects yourself, your family, and everything in your life you’ve worked hard to get. Gold investments help to provide a better future for you and your loved ones, as well as a great way to increase your retirement portfolio.
Investors like gold for a few different reasons. Gold is a tangible asset, meaning you can actually hold it, unlike mutual funds, stocks, and bonds. Gold also keeps its value and allows investors to protect their portfolio against inflation.
Other reasons why you should consider gold for your investments include:
- Gold is Low Risk-Investing in gold protects your retirement from risk. When major world events occur, traditional banking tends to become unsteady as the market index rises. Gold is a secure investment because it retains its value, making it a lower risk.
- Value-Gold doesn’t rust, is durable, and can retain its beauty for a lifetime. Gold also always has a value no matter how unstable the economy.
- Inflation Benefits-Gold pricing will always vary with the market, but it has the unique ability to keep your money safe from inflation. When inflation occurs, the value of money decreases, interest rates remain low, and money in the banks won’t gain value. Gold keeps a consistent value and you can then exchange it for an equal amount of money no matter what is occurring during inflation.
- Portfolio Diversification-Adding gold into your investment portfolio is a great way to diversify your assets. Diversity in your portfolio will reduce risks and volatility.
How to Invest in Gold
Whether you’re an experienced investor or a total newbie, gold can provide you with many benefits. There are several ways you can go about investing in gold, including the following:
- Gold Funds-A gold fund is a mutual fund that invests in gold exchange traded funds (EFTs) where you will not need a DEMAT account. They are also a safe option for beginners as you will not need to follow the performance of your assets.
- Gold Mining Stocks-Gold mining stocks are dependent on the companies that are mining gold. Gold rates control the stocks, determining if they will go up or go down. Company management, costs of production, and hedging activities may also impact gold stocks, however these types of stocks are typically extremely profitable.
- Physical Gold-Purchasing physical gold is the oldest and most popular way to invest with gold. You can do so in a few ways:
- Gold Coins/Bars-Gold coins and bars contain no alloys, making them pure. This means there are no production costs and are typically considered a more profitable option in investing.
- Gold Jewelry-Gold rates for jewelry will depend on the spot rates of gold at the moment.
- Gold ETF’s-Gold ETF’s invest only in actual physical gold. To invest you will need a trading account, a DEMAT account, and you will be required to pay brokerage fees (between 0.25%-0.5% of the ETF cost). ETF’s are traditionally thought of as a better investment option if you want genuine profits. ETF’s invest your money in 99.5% pure gold.
- Gold Derivatives-This category contains products that base their prices on gold’s current value. This is something more geared for advanced investors.
The Future of Gold
As we’ve discussed, gold is a popular investment option because it has so many benefits, including hedging against inflation and retaining its value, both during the short- and long-term. Of course, nobody can guarantee that gold prices will go up, but you can look towards these signs to determine the performance of your gold investments:
- Slow Economic Activity-When the economy is unstable, banks will update their monetary policies and start to print more money. During these slow times, gold has proven to be a better option.
- Political Turmoil-Chaos among political parties within a country can lead to an unpredictable market. Gold remains safe from political turmoil.
- Geopolitical Turmoil-When world politics gets dicey, investors often turn towards gold and away from traditional investment options.
Final Thoughts
Before you spend any money on gold, you should research your options so you can ensure you’re making the right financial decision for you, your family, and your future. It is essential to know the rules of investing in gold, or at least have some guidance with an industry professional, who can listen to your goals and help you make them a reality.