How to Start Investing in Gold

Are you new to the world of investing? Do you wish to know how to start investing in gold? Here is an article to help you out. While you have several investing areas with companies becoming public now and then, there are chances of newer stocks being more volatile and difficult to predict. Gold is a form of investment that always possesses a physical value. Read on to find out more about how you can start investing in gold to reap better benefits.

WHY SHOULD YOU INVEST IN GOLD?

ALWAYS VALUABLE:

While being always valuable, gold is the only financial asset that is not any other person’s liability. In its history of more than 30,000 years, the gold prices have never become zero. It always has value and can stand firm even when the market breaks down.

LONG-TERM STORE OF VALUE:

Gold has remained the storehouse of the long-term store of value for centuries. Gold is one such asset that has been constantly maintaining its value without any depreciation. Gold investments are highly attractive since they can successfully substitute the role of money and can outperform the currency value.

LIQUIDITY:

This is one of the most crucial and significant characteristics of gold investment. You can both buy and sell gold in a very limited time.

SPECIALIZED KNOWLEDGE NOT REQUIRED:

Prior knowledge helps to a great extent if you are investing in mutual funds or purchasing stocks. In such cases, knowledge about the economy and the market helps in making informed and better decisions.

However, while dealing with gold you do not require any such specialized knowledge. Companies also try to make the entire process as simple as possible so that all types of investors can invest successfully without any hassle.

DIVERSIFIES THE INVESTMENT PORTFOLIO:

Gold has a low or almost negative correlation with other forms of asset classes. Thus, it helps in diversifying the investment portfolio at times when the market becomes highly volatile.

WHAT ARE THE DIFFERENT WAYS TO INVEST IN GOLD?

BARS OR GOLD COINS:

Investors sometimes choose gold coins and bars to avoid making charges applicable in the case of gold jewelry. Making charges are generally not levied on bars and coins since they require very limited skilled artistry. Today, many banks, non-banking institutions, e-commerce websites, and jewelers provide gold coins and bars to their customers.

DIGITAL GOLD:

This is one of the most cost-effective and easy methods of investing in gold. With digital gold, you can buy as well as sell gold at any point in time, and that too within a few minutes! Digital gold allows you to make investments in gold even if you possess a low amount of money. Whenever you buy some digital gold, it is represented by some physical gold and related to the gold prices of the current time.

GOLD ETFS:

Gold Exchange Traded Funds are ETFs invested in gold as a form of class asset. It lets you do business with the units on the market. Along with the pros of investing in gold, they also come with the advantages and drawbacks of ETFs.

GOLD JEWELRY:

Since gold is a valuable metal, investors remain highly concerned about the safety of gold jewelry. Also, when you buy gold jewelry, the making charges might reach up to 25% in case you want to get an intricate design. These kinds of jewelry-making charges are irretrievable when you sell the jewelry.

GOLD MUTUAL FUNDS:

Such mutual funds make direct or indirect investments in gold reserves. Generally, they invest in physical gold, mining companies’ stocks, and stocks of gold producing as well as distribution syndicates. How these funds will perform in a country hugely depend on the performances of the prices of gold.

GOLD SAVINGS SCHEMES:

Many jewelers provide such schemes that allow investors to make their gold investments in installments. Under such schemes, a jeweler typically permits an investor to submit a pre-decided amount of money every month for a stipulated period of time.

After the tenure is completed, investors can purchase gold ornaments from the same jeweler of the value which is equal to the deposited amount. Sometimes the jeweler can also offer a bonus to their investors. One can purchase gold based on the current gold price of that time.

GOLD SOVEREIGN BONDS:

Through such bonds, investors can buy gold online. Normally, the principal banking or financial institution of a country issues these bonds as a representative of the government of that country. These bonds come with an assured interest, charged annually. Usually, such bonds have a specific lock-in period with an additional overall tenure.

WHAT ARE THE THINGS TO KEEP IN MIND BEFORE YOU INVEST IN GOLD?

• The performance of mutual funds and gold stocks is different from physical gold. The price of gold is fixed by several factors such as the financial status of the country, supply and demand, etc.
• When a company of the gold industry is influenced due to the alterations in the gold prices, many other factors contribute to change the stock prices of these companies. Therefore, before you buy mutual funds or gold stocks, make sure that you know in detail about the firm and the scheme you are dealing with.
• While investing in physical gold, make sure that it is stored in a safe and secured place.
• Gold prices tend to get hugely determined by the stock markets. So, you should prepare an investment portfolio that can stand against all financial storms and unprecedented situations.

This is how you can take baby steps towards investing in gold. You can also include gold in your investment portfolio as an asset class. Now that you have a clear picture of how to invest in gold and its various aspects, you need to get into the depth of this topic and gather more information about such investments. Before investing, consider your monetary goals, risk tolerance, investment horizon, etc. You can also get in touch with an investment advisor if you need further clarification about your gold investments.