4 Factors to consider before investing in Gold [2021]

One fundamental principle of investing is to ensure you’ve got a diversified portfolio. Diversification is a strategy of mixing a wide variety of securities. In other words, diversification of a portfolio is the practice of spreading your investment risks across different assets.

Although there are several ways you can consider when diversifying, the most common is through investing in precious metals. There are many reasons why precious metal investments are suitable. For instance, precious metals aren’t prone to the economic crisis, can provide a hedge against inflation, have high liquidity, are used as a store of wealth, and much more. A good example of precious metals is gold. Continue reading this article to learn about gold investments.

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An Overview Of Gold

Gold is a rare precious metal, and it’s considered the king of other precious metals. Its scarcity makes it highly valued, that’s why most societies around the world use it as a store of wealth. Gold has many qualities that make it unique. It’s durable, highly malleable, and a good conductor of heat.

Also, gold is one of the precious metals that doesn’t corrode or tarnish. In addition, its many uses in the jewelry, dentistry, medical, aerospace electronics, and computer industries make gold a highly traded metal.

Key Considerations Before Investing In Gold

As earlier noted, gold is a safe option when looking to diversify your portfolio. However, it’d be a good idea to do your research and better understand your investment.

With that said, here are major things you need to consider before investing in gold:

  1. Your Budget

When it comes to gold investments, there are several options you can try. For instance, you can invest in gold accumulation plans, gold bars, gold coins, gold jewelry, and much more. Though choosing the highly-priced option can mean high returns on your investment, you must always consider your budget.

If your budget is high, you can invest in options like gold jewelry. On the other hand, you can consider an alternative like a gold accumulation plan when your investment budget is low.

  1. Seller

Trading in gold is one of the most expensive investments that involve a lot of money, so you need to choose your seller carefully. Research to ensure you work with a genuine seller. One of the best ways to know whether a seller is genuine is by checking their reputation. You can achieve this by reading reviews and feedback online.

In the digital world, most businesses have gone online, including gold dealers. So, you can quickly browse through your preferred seller’s website and read other customers’ reviews. With that said, it’d be beneficial to work with a reputable or a genuine seller to ensure you’re not scammed of your hard-earned money.

  1. Storage

Another critical factor to consider before investing is where you’ll keep your gold. For instance, if you decide to invest in physical gold like bars or coins, you need to store them in a secure place where you can access them easily.

There are many places you can store your physical gold. You can keep your gold at your home using safes or rent safety deposit boxes at a local bank. You can also consider storing your gold through precious metals storage service providers.

On the other hand, if you don’t want to trade in physical gold, you can add gold investment to your portfolio through derivative contacts, exchange-traded funds (ETFs), or gold mutual funds.

  1. Purity

Although physical gold can be a better option, you also need to be cautious about its purity since it determines the value. There are many ways to tell whether gold is pure or not. For instance, you can feel its softness. Pure gold is softer than gold alloys, a mixture of gold and other metals.

The purity of gold can be measured in terms of karats. The higher the karat, the purer the gold is. The highest level of karat is 24. This means that gold with 24 karats is 100% pure.

Takeaway

Gold investment is the way to go if you want to safeguard your portfolio against any future economic uncertainty. This is because gold is a stable investment and its prices keep on going up. So, when you invest in gold, you’re not likely to incur any losses when you decide to dispose of your investment.

However, before investing your capital in gold, there are some essential things you need to put at the back of your mind. For instance, you need to consider your budget, the seller’s reputation, the purity of the gold, and how you’re going to store your gold. Considering all these factors ensures you get the best returns out of your investment.