Investing in gold can be quite intimidating for beginners. How do you get yourself a whole gold bar, like the ones in movies? Do you need a huge, high-security vault in the basement, too?
Luckily, it’s not always like the movies. You can take the investment process one step at a time and think of it like any other investment option out there. This gold-buying guide will help you start with the basics, from knowing what gold options are out there to what you need to consider before buying gold.
Types of Gold Investments
Gold can come in many forms, shapes, and sizes, but you cannot have it all. You can invest in gold through bullion, jewelry, and stocks. Take note that these are only the most common forms of investment.
1. Gold Bars
Also known as “gold bullions,” gold bars are one of the most common ways to invest in gold. They are literally bars of gold, and their size could also vary. Their weight and other specifications are usually stamped on them.
Look for 99.5% pure gold or above if you want to invest in gold bars. Also, be mindful of the weight since it may affect your investment. For instance, you can buy one big gold bar or several smaller bars to meet a certain value that you wish to invest. A 10-gram gold bar and ten 1-gram gold bars would still be 10 grams of gold.
Investing in a gold bar also means taking into account weight and storage. Heavy gold bars may cost you more in terms of transportation. They may also require specialized storage to ensure their security. More importantly, selling heavy gold bars might be more challenging since they are more expensive than light bars.
2. Gold Jewelry
When it comes to investments, jewelry may not be your best bet. The value will depend on how well the jewelry was done, the retailers, the manufacturer, the stone or gem added, etc. Still, just like every investment in the market, you’ll never know how its value will change in the future. So, you can find comfort in the benefits that gold jewelry can bring you.
Investing in gold jewelry may be the most fulfilling choice among your gold options. With jewelry, you can wear it and enjoy the huge price tag it costs you. It’s also aesthetically pleasing and something you can pass on to generations.
Gold jewelry can increase in value when coupled with precious stones and gems. Just make sure that you get the right karat. It’s best to know the value of different karats of gold in jewelry so you know you’re buying it for the right and reasonable price.
Additionally, you may not have to worry about finding storage for these gold investments. You can keep them in your vanity, a jewelry box, or a safe. They’re not as heavy and space-consuming as gold bars.
If you choose to keep them at home, expensive jewelry is often covered by home insurance policies, so you’re still financially protected even if you lose them at home.
3. Gold Stocks
You can also invest in gold without having the actual physical thing. Gold stocks allow you to have a share in gold companies through mining corporations or gold Mutual or Exchange Traded Funds (ETFs). These will enable you to earn money by receiving dividends proportionate to the number of stocks you own.
Stocks don’t have a set value, unlike owning physical gold. The amount of money you earn depends heavily on the market or the performance of the gold mining company you own stocks in. It could fluctuate, so you might not have financial security when you invest in gold stocks.
However, some options are more secure than others. For example, gold ETFs may be more diverse and liquid than a gold mutual fund. On the other hand, a mutual fund is more traditional and consistent, making it a go-to option for beginners.
Things to Consider Before Investing in Gold
Investing in gold is a lot like investing in other assets. You can turn to other essential investment guides and still apply some principles to your gold investments. Before buying your first gold bar, jewelry, or stocks, here are things you need to consider:
- Purpose: Why do you want to invest in gold? Is it for passive income or to have a safety net in the future? Knowing the intention of your investment can help narrow down the type of gold investment you may want to buy.
- Value of gold: Like a lot of things, the value of gold can fluctuate, but looking at its history, it has consistently been a high-value metal until today. Nevertheless, you should still think of the value of gold when investing in it. Consider looking at trends or ask a professional so you can predict how the market will go in the next few years.
- Taxes: Be mindful of your country’s taxes on investments, assets, and even gold. It may determine the overall cost of having gold investments since taxes are something you simply can’t do away with.
- Cost: When you purchase gold, you’re not just buying the actual thing. You’re also paying for the dealer, transportation, etc. If you’re investing in stocks, you may also have to pay for advisors, among other fees.
- Storage: Safe storage for gold is crucial since gold is a treasure and one of the most coveted objects in the world. The storage you need depends on the kind of gold you have, so remember to look into different options before buying gold.
- Karat or hallmark: You’ll never avoid the word ⦁ karat when talking about gold. The higher the price tag, the more karat–this might be basic knowledge, but it could also be information one could overlook. So, always check the hallmark of the gold you’re buying.
Ready for Your Golden Investment?
When investing, start with the basics, especially because foresight is necessary when making major financial decisions. Don’t miss out on considering the purpose, value, cost, and other factors that will affect your gold investment. There are several gold options for you, so make sure to choose the best one for your needs.