For hundreds of years, gold has held value as currency, jewelry, art and manufacturing material. Many see gold as a viable alternative to conventional stocks and bonds, especially in times ofand .
Additionally, gold is often seen as a safe haven for your holdings in tumultuous times. During the COVID-19 pandemic, the price of gold peaked at over $2,000 an ounce in August 2020, rising close to 35% higher year to date, The Washington Post reported.
Fortunately, there are several ways a beginning gold investor can begin investing. Start by requesting a free wealth protection kit to learn more about this unique investment opportunity.
How to invest in gold for beginners
Here are four different gold investments to consider for your portfolio.
If you want to, you can transfer a portion of your existing individual retirement account (IRA) into a without any tax implications. Like a traditional IRA, your money grows on a tax-deferred basis over time.
Alternatively, you could opt for a Roth gold IRA which you’ll fund with after-tax dollars. As such, you won’t owe taxes on distributions you take during retirement. Also, If you run a small business or are self-employed, a Simplified Employee Pension (SEP) gold IRA may be a viable option. You could set up SEP gold IRAs for yourself and your employees.
Beginning investors may Learn more about getting started with a Gold IRA now.by working with a reputable gold IRA company to set everything up to adhere to IRA regulations. They can help you appoint an IRA-approved custodian and the depository to store the physical gold in your IRA.
Physical gold is available in many forms, including gold bullion, such as gold bars and coins. You may enjoy the look and feel of physical gold, but you’ll also have to store and insure this precious metal.
The return on investment (ROI) with gold depends on the asset’s price rising or falling. Alternatively, you could invest in a gold mining company or other gold business, so your profits could be based more on the company’s performance rather than the price of gold.
You can buy physical gold in many ways, including via reputable gold dealers, private collectors and pawn shops. The price you pay will depend on the purity of the gold in the bar or coin, and the price of gold at that time.
As a reference, gold bullion is most commonly sold in one- or 10-ounce bars, with gold currently hovering. For its part, it may be easier to invest in gold coins, which are available in quantities of one ounce or less.
are another way to , although it may be too risky for beginning investors due to its speculative nature. With gold futures, an investor and seller enter into a contract where the buyer agrees to purchase a certain amount of gold at a specific price and date, regardless of market conditions.
That means if you’re holding the investment and the price is dropping just before the contract’s expiration date, you could lose much or all of your investment.
If you’re considering investing in gold futures, you must understand how it works and the risks involved. In fact, the brokerage firm you work with may require you to sign a form indicating as much before opening up your investment account to gold futures.
Gold mining companies
If you’re new to, you may enjoy the familiarity of stock market investing by owning some stocks in gold mining companies. You could profit if the price of gold rises and the company’s stock increases as its gold inventory becomes more valuable.
Your gold investment could also grow if the company produces more gold or can mine at reduced costs. Conversely, you could lose money if the company mismanages its operations.
Exchange-traded funds (ETF) are a popular way beginners can start investing in gold. With ETFs, you can invest in one of 36 ETFs on the U.S. markets, each exclusively holding gold mining companies. Gold ETFs can provide you with exposure to gold and add diversity to your portfolio.
Whether you invest in gold mining companies individually or through an ETF, you can buy these investments through an online broker.
There are multiple gold companies that can help you start investing in the precious metal. Use the table below to explore some options.
The bottom line
Before you start the process, understand that investing in gold is not typically a way to grow your money. Over time, the stock market generally outperforms the price of gold.
Instead, owning some gold is one way to diversify your portfolio (5% to 10% of your portfolio at most). If you want to invest in gold, consider consulting with a financial advisor who can help you determine how to incorporate gold into your overall investment strategy.