Investing in gold has never been this easy for beginners. There are many ways to buy gold, and we’re going to discuss them here for you.
In this article, I will show you where to buy gold, what should you buy, and what percentage of your precious money should you allocate to invest in gold.
Why invest in gold in the first place?
Well, the answer to this question depends on the person you ask. There are experienced investors such as Warren Buffet who would not invest in a “nonproducing” asset like gold.
On the other hand, there are people like Kevin O’Leary who says that gold is “A stabilizer and an insurance policy.”
It is true, that the dollar becomes less valuable over time. In fact, it losses half of its value every 40 years.
As a consequence, it’s recommended to buy gold just to be protected against the deflation of paper money. Gold doesn’t lose its value like paper money.
Take a look at the results from this inflation calculator that I used to measure the buying power of the dollar over time.
Now, let’s see the rate of return of a $1,000 gold investment made in the year 1968 using a Gold Return Calculator.
Now that we have a better understanding of what happens with paper money and gold over time. It’s time to find out how to buy gold.
Ways to invest in gold
There are many ways to invest in gold, but in this article we’ll only discuss the easiest ways to do it, considering that this article was made exclusively for beginners.
1. Physical bullion
Investing in physical gold is one of the fastest and easiest ways for new investors to own this precious metal.
What type of physical gold should you buy? You should consider buying gold coins, gold bars, and jewelry.
The following are the best gold coins to buy as a beginner. They are easy to sell, easy to store, and easy to carry around.
This is the preferred method for banks and investors simply because you get more ounces of gold for your money than coins. These are some of the most popular gold bars among beginners.
1 oz gold bars.
Similarly to coins and bars, jewelry is easy to store, easy to sell, and products can be returned for the current metal trading price. The following jewelry examples are among the most popular for beginners.
Gold Cuff-links, gold earrings, and gold bracelets.
Where to buy physical gold?
Only buy gold from reputable websites and coin shops. The following are websites that have been in business for many years and have a large selection of gold.
How much should you spend on gold?
According to several sources, it is not recommended to invest more than 5% of your portfolio in gold. Remember that investing is all about diversification.
How to store gold at home?
Take into consideration that If you live in a neighborhood with a lot of criminal activity, it’s obviously not recommended to keep gold at home.
These are some items that you can buy to store your physical gold at home:
Pros and cons of buying physical gold.
|Hedge Inflation||It doesn’t produce anything|
|Diversification||You need to store it|
|Universal accepted||Premium and taxes|
2. Exchange Trading Funds (ETF)
In addition to owning physical gold, you can also have exposure to this precious metal by buying ETFs. An ETF works just like a regular stock, and it tracks the price of gold, but they’re also easy to buy and sell.
Note: In order to buy an ETF, you first need to open a brokerage account.
The following are some of the most popular ETFs among beginning investors:
- IShares Gold Trust
- SPDR Gold Shares (Ticker: GLD)
- Aberdeen Standard Physical Gold Shares (Ticker: SGOL)
Pros and cons of buying ETFs
|They are easy to trade||Sales are not settled for 2 days following a transaction|
|They are tax-efficient||Trading fees can add up overtime|
In conclusion, we’ve learned that investing in gold could help us cope with the devaluation of paper money over time, but it shouldn’t be our only investment strategy.
It’s always good to emphasize that diversification is what makes up a strong portfolio.