According to NerdWallet.com, gold is often touted as a recession-friendly investment. Given the current economy, some investors are looking at turning part of their portfolios into gold.
Like any investment, you should consult an investment advisor if you intend to make a significant purchase. Also, before you begin buying this precious metal, consider the following gold investment tips.
Gold Investment Tips: Things To Know Before Investing
Here are some essential things that people who are new to gold investing should understand before buying.
Different Ways To Invest in Gold
There are a few ways to invest in gold. Buying physical gold is only one of them.
You can also invest in gold funds, stocks, and futures. However, with the latter three options, you never have the gold in hand or even own the actual gold they represent.
Buying Physical Gold
When investing in physical gold, you can buy coins and bullion. Gold coins often retain their value better than bullion since gold coins are typically rare. This rarity helps coins hold their value when gold prices dip.
If you choose to invest in gold, look to get started with bullion or coins, such as this gold crate curated collection.
Buying gold jewelry will rarely net you a return. Jewelry typically has a high mark-up at the time of purchase. Most buyers do not even recoup their purchase price when selling gold jewelry.
You can also purchase a gold certificate. A gold certificate proves ownership of physical gold, although the gold is not kept in your possession.
While buying certificates can make gold investing easier, be careful to purchase gold certificates from a verified broker. Fake certificates are a common scam.
Storing Gold
If you invest in physical gold, it is good advice to insure it, and you’ll need a place to store it securely. Storage options might include a safe in your home or a safe deposit box at your bank. An insurer might even require proof that the gold is secured in some manner.
Selling Gold
Investing in gold does not pay dividends like some stocks. Your money remains tied up in your investment until you sell.
Also, selling is not as easy as when you are trading stocks. You’ll need to find a reputable dealer willing to buy. Sometimes this might be the dealer you purchased from, but not all dealers have a buy-back program.
The sale of physical gold is taxed differently and sometimes higher than when selling other types of investments. It is taxed at the collectibles capital gains rate. An accountant can advise you on your tax obligations when selling gold.
Is Gold a Good Investment?
Whether gold is a wise investment for you is a question best left to an investment advisor. Gold probably shouldn’t make up the majority of your portfolio, but there indeed might be a place in it for some of this precious metal.
Just make sure you understand the many nuances of a gold investment, since it is not the same as investing in stocks, bonds, or mutual funds.
See our Finance section for more about investing in gold and other investment tips.