Investing in gold is a popular way to try to earn extra money. Gold is relatively immune to the effects of inflation, drops in the value of currency, and global fluctuations, which makes it a particularly attractive investment. If you do decide to invest, try to vary your overall portfolio and put no more than 20% of your assets into gold. You can invest in physical gold by buying and storing gold coins or bars, or buy gold indirectly by investing in gold stocks and funds.
[Edit]Buying Physical Gold
Decide how much money you’re willing to invest. Gold usually makes up a small part of an investor’s overall wealth. Aim to invest no more than 20% of your money in gold. This will allow you to diversify your overall investments without tying up or risking too much of your capital.
If you only have a small amount of money to invest, aim for a more conservative 3 to 10% investment in gold.
Find a reputable gold dealer by checking your country’s treasury website. Look for a list of approved sellers before you buy your gold. It’s important that you find a dealer who has been reviewed or endorsed by the government to ensure your safety.
There are many website scams for buying and selling gold, so be sure to check the credibility of the dealer you plan to use.
If you’re in the US, check out the US Mint’s website for a list of dealers who have been checked for complaints with the Better Business Bureau. These dealers are not associated with or endorsed by the US mint, but they are more likely to be reputable than dealers who are not listed.
Compare gold dealer prices to get the best value. Check out exchange websites to see the spot price of gold, which is the current cost gold based on the estimated future price of gold. The spot price fluctuates throughout the day. Compare the prices for gold advertised by different dealers, including additional costs for delivery.
Avoid paying more than 5% over the spot price for your gold.
Purchase gold bars for large, long-term investments. If you want to invest a large sum of money in gold, buying gold bars may be simpler than buying a large number of gold coins. The purchase will be more straightforward and the gold will be easier to store and keep track of. You may want to avoid buying gold bars if you think you may want to sell part of your investment later on.
Keep in mind that gold bars are often harder to resell and ship than coins.
Since 2013, the price of gold bars has fluctuated between approximately $35,000 USD and $45,000 USD.
Buy highly-circulated gold coins for a smaller, flexible investment. If you are looking to invest a few thousand dollars or less in gold, opt for gold coins. Coins are often easier to sell when you want to liquidate part or all of your investment. You may want to purchase widely-circulated gold coins and avoid rare coins, which are harder to evaluate and resell.
Investing in gold coins will allow you to break up your investment by selling part of it or buying more in small increments.
Use cash, a bank wire, or a cashier’s check to purchase your gold. Most gold dealers will not accept credit cards for gold purchases for the sake of security. If you don’t have enough cash, you can purchase a cashier’s check from your bank or arrange a wire transfer to pay for your gold once you have worked out a deal. You will have to visit your local bank branch for these cash alternatives.
To get a cashier’s check or make a wire transfer, provide details to your bank about the payee such as their name, full address, and bank information (e.g. their bank branch number.)
You can make your purchase in-store at gold dealer shops or online from reputable vendors who will ship the gold to you securely.
Store your gold in a safe deposit box or home safe to keep it secure. Once you own physical gold, you will have to protect your investment from loss or theft. The best way to guarantee the safety of your gold is to get a safe deposit box at a bank. If you decide to keep the gold at home, invest in a safety deposit box to protect it in case of a robbery or other emergency.
Be aware that storing your gold at home will likely result in a higher insurance premium if you inform your insurer.[Edit]Investing in Gold Indirectly
Buy into a gold exchange-traded fund for a simple, low-cost investment. Gold exchange-traded funds (ETF’s) are funds managed by gold experts, which means strong professional guidance with regard to your investment. There are different types of ETF’s, but they all involve buying shares of an ownership of gold, meaning that you own gold indirectly. Discuss different types of ETF’s with your financial advisor to see if they are worth adding to your investment portfolio.
Find a reliable financial advisor by asking for referrals from friends or colleagues.
Shareholders of ETF’s have no direct claim to the gold.
Each ETF will have its own types of expenses.
ETF’s are subject to taxes.
ETF shares are traded on public stock exchanges.
Try gold exchange-traded notes for a riskier investment with high earning potential. Gold exchange-traded notes (gold ETNs) are set-term investments that pay returns based on how the gold futures market performs while your money is invested. You may profit significantly or lose all of your money since they offer no principal protection. Talk to your financial advisor about this kind of investment, which may or may not work for you depending on your financial situation.
ETN’s are also flexible as they can be traded at a higher price or sold and re-bought at a lower price.
Purchase gold miner stocks to base your profits on one company. Gold miner stocks allow you to invest directly in a particular gold miner. This means that your profit or loss is based entirely on the performance of 1 (or more) gold mining company. Look at your gold miner stock investment options with your financial advisor to see if the adventure and possible profits of this kind of investment are worth the risk.
The gold market is volatile, so this sort of investment will likely be a roller coaster ride.[Edit]Tips
Avoid buying gold from unreliable websites as there are many gold scams on the internet.
Be patient with gold stocks as they are prone to rising and crashing frequently.
As an investment strategy, consider putting a fixed amount of money towards gold each month regardless of the current price to ride out the ups and downs of the market.[Edit]References
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