For those that are investing in gold and are seeking gold investment advice, the main factors to consider are
- What form of gold to invest in
- How much you are considering investing in gold
- Your attitude to taking risk
- How long you want to hold onto the gold
Investing in Gold – What form of gold to invest in
This will be the first question that enters someone’s mind when considering investing in gold, and for good reason. There are numerous ways to invest in gold. Below is a summary of the main types of fold investment.
- Buying gold bars
- Buy gold coins online
- Gold mutual funds
- Gold Jewellery
- Gold mining stocks
- investing in gold – gold bars
As you can see there are a lot of choices out there. Good gold investment advice would be to look at your own individual situation and compare the benefits and advantages of each gold investment type to your own needs.
An example would be, you have funds to invest however, you require access to the funds in three months time. Well, buying
gold jewellery gold bars might not be suitable as you would need access to the funds in a short period of time and these forms of gold investment are not liquid.
What percentage of your portfolio are you considering allocating to investing in gold?
If you are looking to invest in gold you should consider the important point of how much you are considering investing. It is generally accepted that average investor should consider having around 5% to 20% of their portfolio in gold.
There are other factors that should be considered such as attitude to risk and term of your investment, but the value of your initial investment will influence the choice of gold investment as well.
If you are limited in funds you should consider investment in gold mutual funds, ETFs or even gold mining stocks. You can enter the gold market with a lower initial investment than what would be required for gold bars.
Gold jewellery and gold coins, depending on the asset, should be considered good middle ground.
With regards to the funds set aside for your investment in gold, you should set aside funds for any initial and ongoing costs. As investment in gold bars can involve premiums of around 10% and will also involve ongoing storage costs (unless it is in the bottom of your basement!)
- Photo by flickr.com/teegardin
Gold investment advice – your attitude to risk
Attitude to risk is an integral part of any portfolio investment, not just when considering investing in gold. Your attitude to risk, and the risk of the form of gold investment should be considered and matched.
Investing in gold bars, gold jewellery and gold coins should be considered the lowest risk in comparison to others. These will pretty much be dependent on the spot price of gold. There will be other factors with gold jewellery and coins that would have to be taken into consideration such as rarity and popularity.
Investing in certain Gold ETF’s and gold mining companies should be considered high risk and not suitable for the average investor.
Gold investment advice – Should length of investment term influence your decision?
The length of term that you intend on holing onto the gold should also influence what type of gold you intend on investing in to a certain degree. It is generally considered that items such as gold bars, coins and jewellery should be considered a long term investment vehicle. This is mainly due to the fact that there are usually initial charges incurred and as such it is better to hold onto these items for a long term in order to recoup the initial outlay.
Gold ETFs and gold mutual funds have very low initial costs and that is why the short term investor favours these options.
