Many investors tend to stick with what works for them for long periods, and it’s only when things go wrong that they begin to look for alternatives. While traditional investments like stocks and bonds are typically the first things that come to mind when discussing investments, other products can be included in your portfolio.
Inflation and interest rates went from decades of staying low to having a whirlwind year in 2022. There are many reasons to invest in alternative assets, and one of the best is to diversify your investments. Different investment products respond to events and situations differently, so having more diversification can lessen the impact of a sudden economic or geopolitical event.
One of the greatest alternative assets to include in your portfolio is gold. It’s a great way to mitigate risks from other investments and preserve your wealth. But for many people who are used to purchasing stocks, bonds or funds, it can be difficult to know where to start when it comes to investing in gold.
Here, we’ll discuss the essential things to be aware of when starting to invest in this alternative asset.
Different Methods
For people who mainly purchase stocks and bonds, this first consideration can come as a surprise. There are different ways to invest in gold: physical assets, gold ETFs, or gold mining stocks. There are pros and cons to each, depending on exactly what you’re looking for in an investment. One of the most common and popular methods is the physical asset in the form of gold bullion, as one of the reasons investors like purchasing precious metals is to own a tangible product. You can purchase physical gold in the form of bullion bars and coins.
Remember to Plan for the Logistics
While it’s more interesting to talk about returns and profits, there are some logistical considerations that you should plan for before making your first gold purchase. You don’t want to purchase it, bring it home, and then realize you have nowhere to put it.
Physical gold is popular because of its tangibility, but it can create a security issue if you don’t plan accordingly. There are gold vaulting services and safe deposit boxes, but these costs can quickly add up and may not be desirable as a long-term solution. Home safes are solid options for storage. Quality home safes can be expensive, but once the initial investment is made, there are no additional monthly charges or fees.
When storing gold in your home, whether in a safe or not, insurance is another consideration. If you have a significant amount of gold stored in your home, you should consider having it insured. A regular homeowner’s insurance policy isn’t likely to provide sufficient coverage, so a special policy designed to cover valuables can give peace of mind.
Find the Right Dealer
As with most things, who you work with when investing in gold will likely have a significant impact on your experience. You can purchase gold online or in person, but in either case, it’s essential to look for a dealer with a strong reputation who provides unparalleled customer service and fair pricing.
A good strategy is to buy and sell your gold and silver with the same bullion dealer, as it allows you to establish a strong relationship. They’ll want you to be happy and keep returning, and will likely let you know about new products or good deals in the future.
