Many investors are interested in discovering ways to diversify their investment portfolio. Financial advisors have recommended diversification by including precious metals, particularly gold, in their client’s portfolio for better returns over time. All investments involve risks; these include gold coins and bullion. The difference is that gold is a time-tested hedge against economic inflation and economic uncertainty. Here are some tips to help you get started in learning how to buy gold.
- Why do you want to invest in gold?
Develop a good sense of the role that gold will play in your investment portfolio. What is it about gold that appeals to you? Gold marks wealth and elite status even from the earlier times.
Some people want gold to be added to their prized possessions. Others want to buy gold to serve as insurance especially in times of economic uncertainties and it makes them feel safer than bonds. You can buy different forms of gold like gold bars, gold coins, gold mining stocks or gold jewelry. Have a clear understanding of why you want to invest in gold to help you decide on which type of gold to purchase.
- Match your choices to your objectives
To determine which type of gold should you buy, establish your reasons why you are interested in buying gold. If your goal is to hedge financial uncertainty, then contemporary bullion coins will serve your purpose. Values of bullion coins will generally fluctuate according to the current price of gold. If you want capital controls, you can include historic gold coins that can carry a significant collector premium based on historical supply and demand.
- Decide how much of your portfolio will be put in gold
Most financial advisors recommend putting 10-20% of your wealth in gold while the more adventurous ones put up to 30% of their resources. The percentage of gold allocation will depend on your risk tolerance and your level of concern about the economy. In case currencies are devalued, you still have your own personal gold standard to preserve your wealth.
- Choose the right gold firm
You might have heard horror stories revolving around gold investment. This normally involves dishonest dealers that are looking to rip off uninformed investors and selling them overpriced gold coins or bullion. Choosing the right gold firm will help minimize these risks and bad experiences. A simple background check through different third party reporting services such as Better Business Bureau (BBB), TrustLink, or the Business Consumer Alliance will help you look for honest and reputable dealers. Established dealers like Regal Assets offer gold bars that are produced by recognized manufacturers and offer some protection against counterfeiting. Your success or failure as a gold owner will largely depend on the gold firm you choose; it is highly important that you choose the right gold firm.
- Learn everything you can on how to buy gold
As with every venture, it is always prudent to know what you are getting into before even considering taking a step. Familiarize yourself with the ins and outs of the trade; scrutinize the legitimacy and track record of every dealer that you come across. Do some research and learn from someone other than the person that is trying to sell you the gold coins or bullion. If you don’t know much about gold coins and bullion, know your coin dealer to help you make responsible decisions.