Even though modern investment options such as NFTs, crypto, etc. are very compelling options to get rich, the uncertainty associated with them is really high.
Let’s take Bitcoin for example. The price of 1 BTC has dropped all the way from being over $50,000 to just around $17,000 in the mark of just 1 year!
Even though these investment methods do make you rich quickly, they also have the potential to drop you below ground level in a jiffy.
And that is exactly why physical resources like real estate, precious metals, etc. are still considered a great investment. Physical resources will always be in demand, and their value will ideally only increase in the long run as they become scarce.
Gold is considered one of the best precious metals for investment. Gold is super useful, not just in jewelry, but also has its role in everything from electronics to space exploration.
However, no investment is perfect. Even investing in gold comes with its own challenges and risks.
In this article, we take you through 5 important points that you need to help you get a head start with investing in gold.
Let’s look out for the Five Crucial Things Before Investing in Gold
If Opting Gold IRA, Pick a Trusted Custodian
An IRA or Individual Retirement Account is a retirement savings account with tax benefits towards which you can contribute your pre-tax or after-tax income.
Gold IRA is among the popular IRA types out there. As IRAs are aimed at long-term benefits, gold is a great investment for the same.
Physical gold is purchased and stored in gold IRAs. However, you cannot directly convert the gold you own into an IRA, nor can you purchase new gold and convert it into IRA. Instead, you need to pick a custodian that can buy and store the gold in IRA for you.
There are lots of brokerage firms that offer gold IRA services. However, as you’re hiring an agency to buy and store gold as a long-term investment, it is essential that you pick the right custodian.
Always make sure to pick a gold IRA service provider such as Lear Capital, that has years of industry experience, positive reviews from existing customers and reviewing critics alike, and is transparent about the methods used to purchase/store your gold and any fee associated with it.
Understand the ROI
Gold is best considered a long-term investment. Sure, just like any other form of investment, there has been a shorter period where gold has yielded a significant rate of return. For instance, the returns on gold were rated at 24.6 percent in 2021 alone, wherein the decade average ROI on gold is just 9.8 percent.
However, gold is considered a great commodity that can withstand the test of inflation and global financial conditions. Hence, it is important that you understand your ROI goals before investing in gold and understand how long it’ll take to reach that goal.
Diversify Your Investment
The philosophy of don’t put all your eggs in one basket is very relevant in investment. The same applies to gold as well. Regardless of whether you invest in gold to meet your short-term or long-term goals, never try to put all your money into it.
Always make sure to diversify your investment so that your overall portfolio doesn’t take any unrecoverable hit in case of bad times.
Gold Jewelry Isn’t Really A Great Investment
Gold in every form is valuable. However, if you’re considering investing in gold jewelry, then it isn’t the best choice you have. Gold jewelry prices aren’t pure gold as it needs to be mixed with metal alloys such as silver, copper, nickel, and zinc to maintain rigidity when made into jewelry.
Moreover, gold jewelry comes with a retail markup that the seller charges for manufacturing the jewelry.
All things considered, gold jewelry will give you a lower ROI when compared to gold bullion, which is the highest purity gold that is in the form of bars, coins, and ingots.
Always Ensure Secure Storage of Physical Gold
If you wish to take gold investing into your own hands, thus buying when the price is lower and selling when the prices are higher, then it is important that you ensure proper security for your physical gold.
It is always recommended that you store your physical gold possession in either a secure bank locker. Also, make sure to take insurance for your gold asset, so that your investment does get protected in case of any unfortunate event such as fire outbreaks, thefts, etc.
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