Investing in gold: 7 points to keep in mind

EditorialRoom 10th December 2019

Investing in gold: 7 points to keep in mind

Throughout the centuries, gold has been seen as a special and valuable commodity. When world tensions rise, the yellow metal often outperforms other investments. Let’s consider the know-how of investing in gold.

1. Different Forms of Buying Gold

Investors can invest in gold through jewellery, bank coins, bullion bars,  exchange-traded funds (ETFs), or buying stock in gold miners and associated companies.

2.Decide how much money you’re willing to invest

Gold usually makes up a small part of an investor’s overall wealth. Any sensible investment strategy should hold a suitably diversified spread of assets.

3. Check the credibility of the dealer you plan to use

There are many website scams for buying and selling gold. Look for a list of approved sellers before you buy your gold.

4. It won’t provide you with an income
Gold in any form does not give any current income.  It will pay you any interest, nor will it provide you with any dividends. The only exception is the dividend option in the gold ETFs.

5. It’s not risk-free
Gold can be a highly volatile investment so you shouldn’t put a large amount of your assets into it. You should be prepared to accept the risk that you could lose the capital you invest.  Seek professional financial advice if you’re uncertain whether this is the right kind of investment for you.

6. Liquidity
When it comes to liquidity, gold is a great investment option. At any time of the day and any day gold can literally be converted to cash.

7. Capital appreciation
Historically, gold has been the perfect hedge for inflation. But in terms of absolute returns gold has fared rather poorly giving returns   Shares and real estate are found to be better than gold in terms of capital appreciation as the former have given larger return values over inflation.

There’s no perfect way to invest in gold, whether the physical metal or gold-related securities: Each option comes with trade-offs.  Armed with the knowledge of how the gold industry works you can make the decision that’s right for you.

Categories : Investments
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