As a beginning investor, many things can be confusing. What type of gold to buy? Where to invest? When should I invest in precious metals? What kind of benefits does gold offer?
Beginners often ask these common questions, and you should have answers before deciding to invest in gold or expand your current portfolio.
In this post, we will discuss what does it mean to invest in gold.
Why Gold?
Why is it a good idea to invest in gold? You might get different answers to this question, but it all comes down to protecting yourself, your family, and everything you’ve worked hard for. Investing in gold provides an excellent opportunity to increase your finances (in the long term) and create a better future for yourself and those around you.
Many people like the fact that they can hold gold. Compared to bonds, stocks, and mutual funds, gold represents a tangible asset. Others appreciate gold’s ability to maintain its value, offering investors a way to protect their finances from inflation.
Low Risk
Investing in gold helps safeguard your wealth and protect it from risk. Whether political events rock your country’s economy, the market index rises, or banks look unsteady; gold will always be an attractive option for investors because of the low risk. Experienced investors see gold as a secure base to invest in and preserve their property.
Value
Gold remains valuable for many reasons. As a durable metal, it doesn’t rust, meaning it can last for a lifetime without losing its color or shine.
Gold-producing nations mine gold regularly (approximately 500 ounces per year), and most of it finds use in jewelry businesses or for industrial purposes.
Physical gold has inherent value. Unlike digital currencies or stocks, the price of gold can never fall to 0. Gold will always have worth, no matter how unstable the economy.
Inflation Benefits
Although the price of gold varies, one of the main advantages of this precious metal includes its ability to keep your money safe from inflation. When inflation increases, the value of money will decrease over time.
Interest rates remain low, meaning money in the banks won’t gain value. Gold holds a consistent value, which means that you can exchange it for an equivalent amount of money, no matter the interest or the inflation rates.
Consider an ounce of gold and a $20 bill in 1920—they both have the same worth. At that time, you could purchase a designer suit or a nice table for your home. If we fast forward to today’s value, $20 will barely cover the gas or parking fee required to drive somewhere to purchase the table or designer suit. However, the ounce of gold now possesses a worth of $1,900. This example shows how gold maintains its purchasing power and value (compared to cash).
Portfolio Diversification
Adding gold to your portfolio provides an excellent way to diversify your assets. Having a diverse portfolio helps reduce volatility and risk for investors. You can discuss portfolio diversification with an expert who can explain how an investment works and recommend the best option for you based on your resources and financial goals.
How to Invest in Gold in 2021
As you can see, investing in gold offers many benefits, no matter your status as a beginner or an experienced investor. If you want to invest in this precious metal, you will find several ways to do it. This section will provide you with the necessary information to help you decide on the safest investment option available.
Gold Fund
A gold fund is a mutual fund that invests in gold ETFs (Exchange Traded Funds). When investing in a gold fund, you don’t need a DEMAT account, making the process a bit simpler. If you are a beginner, gold funds offer a safe alternative because you have to worry less about following the performance of your assets.
Gold ETF
Gold ETFs are funds that invest only in physical gold. To invest, you need a trading account, a DEMAT account, and payment of brokerage fees (the fees vary from 0.25%–0.5% of the Gold ETF cost). Comparing the performance of gold, consider an ETF as a better option if you want real profitable returns.
Gold ETFs invest your capital in 99.5% pure gold (90% of the money in physical gold).
Gold Mining Stocks
Investing in gold stocks is like investing in other stocks on the market. They differ in that gold mining stocks depend on the companies responsible for gold mining, which many agree are highly profitable. The gold rates usually control the performance of gold stocks and whether they will go up or down. Other factors that may impact gold stocks include company management, production cost, and additional hedging activities.
Physical Gold
Investing in physical gold remains the oldest and most popular method. Whenever you purchase a gold coin or gold jewelry, you invest in gold.
- Gold Jewelry: You can purchase gold jewelry (ring, bracelet, earrings, or bracelet) from a certified jeweler. The return rates depend upon the gold rates at the moment.
- Gold Coins or Bars: Gold coins and bars don’t differ too much from gold jewelry. However, they contain pure gold (no alloy) and don’t have any production costs. Compared to jewelry, gold coins and bars stand as a more profitable option.
Gold Derivatives
Gold derivatives cover any product that determines its price based on gold’s current value. Gold derivatives are suitable for advanced investors and traders. They can include trading accounts, where you can trade on the gold value via an online platform.
Individual Investment
For many people, gold investment provides an excellent way to secure hard-earned property, preserve wealth, and stay safe for retirement. Individuals will agree that it offers a hassle-free way to keep one’s money somewhere other than a bank. If you want to invest in gold, you will need a gold broker or dealer with a solid reputation and impeccable track record.
At Learn About Gold, we employ professionals who have years of experience in trading or buying gold. Consider us your go-to source of gold investment information and the company to call to invest in gold coins or bars. Our brokers offer expert consultation and complete guidance on your investment and various options that suit multiple budgets and needs.
Profit-Oriented Investment
If you believe financial, geopolitical, or monetary instability lies ahead of us, investing in gold coins, bars, or funds will provide protection for your wealth. In times of economic uncertainty, gold is the only asset that grows while other investments like property, equities, and cash remain susceptible to risk and significant decrease.
Over the years, the gold market has presented substantial growth; however, it can often fluctuate, so it pays to know when to invest and when to wait.
Over the last decade, gold has seen the highest consistent rise in value and has grown more than 200%. Since 2015, the value of the average gold investment has increased more than 50%. The challenging global economic and political situations currently affecting investment worldwide (the Covid-19 pandemic) mean that investors want to invest in gold coins or bullion more than ever before to avoid potential inflation and secure their finances.
The Future of Gold
Given current economic conditions, gold endures as an attractive investment option on a short- and long-term basis. While no one can guarantee that gold prices will go up, look for these signs to determine gold’s health and potential performance.
Political Turmoil
When political parties within a country disagree, it may lead to policy changes and unpredictable market situations. Chaotic circumstances like these can benefit investors as gold is the only yellow metal safe during political turmoil.
Slow Economic Activity
In times of economic instability, central banks worldwide update their monetary policy and start printing more money to cover the expenses. During a slow economic activity, gold has proven to perform better than any other precious metal or currency.
Geopolitical Turmoil
A conflict between two or more countries can signal investors to invest their money in gold as a safe haven.
Research Your Options
Once you’ve decided what form of gold you want to invest in, the next step requires researching your options. You must know the rules of investing in gold or have someone by your side who can guide you in the process.
If you need professional assistance with buying or investing in gold, you can discuss your options with our financial advisor.
At Learn About Gold, we offer expert advice that prepares you for the stock market and teaches you how to make smart investment decisions. We can also refer you to reputable gold investment companies who can give you the best deals in the market on gold coins and bullion.
Contact us today to schedule a consultation.
