Getting into investing can be intimidating at first- shares, stocks, bonds and prices are loaded with jargon and seem to be constantly moving, but once you know what you are looking for, it’s easy to find your own path through.
The best piece of general investment advice is not to put all your eggs in one basket. But it’s helpful to build a portfolio of different investments so that you are earning profits from one, even if another is stalling. Gold is a great addition to consider because it’s beginner-friendly and relatively simple. It also tends to do well against the market so it rounds out your portfolio nicely.
Compared to other options, gold investing benefits are pretty straightforward, giving you plenty of reasons to start your investment with gold. Gold commands good value in the face of turbulent markets and unpredictable situations, which makes it an easy choice for someone just getting into investing. Rates are stable across the globe and it’s simple to acquire gold at relatively the same price wherever you decide to buy.
It’s considered a low maintenance investment option because it can stay stored safely in someone else’s vault and still appreciate in value. It’s also not an investment that has big peaks and troughs which means you don’t need to be constantly checking in to see what’s happening, more often than not it’s doing well, even if your other investments are fluctuating on the market.
Investing in gold is a time-tested way to secure your future and grow your wealth over time.
A brief history of investing in gold
Gold has proven to be a worthwhile investment even after all this time. It has preserved its value for centuries, unlike paper currency that deviates drastically with political and environmental changes.
The history of gold legacy continues, even though the widespread “gold standard” or being able to exchange paper currency for gold was abandoned in 1976. This system involved nearly all countries fixing their value of their currencies relative to a specific amount of gold, or linking their currency to a country that did. Gold backed the value of money as it signified an agreement between society and its monetary institutions that currency has an equal counterpart in gold.
Historically, gold was bought as a hedge to protect investors from risky situations that could result in depreciation in commodity value. It can still be used this way today, albeit on a more digitally convenient level. Exchanging gold for money is still possible even though the gold standard of currency has changed and the technology surrounding investment options has expanded.
Why investing in gold is lucrative
If you’re looking for a quality long-term investment option, buying gold makes sense. Gold is a way to conserve wealth across generations since it retains value in the face of geopolitical instability, financial insecurity and other unpredictable situations.
In almost every instance of high inflation, the purchasing power of gold has soared, going in the opposite direction of paper currency that is so reliant on market supply and demand for its value.
Gold also goes further, even when the general price levels of a country are falling in a period of deflation, making it a solid investment option to diversify your portfolio and reduce your wealth volatility.
Since its value is not pinned on paper currency, gold retains and appreciates value over time
The only real part left to decide is how you want to start your investment. With new technologies come new opportunities and multiple ways to invest in gold. Understanding how gold and financial technology work together gives you the ability to invest on a global scale and take up ready-made options such as tokenised gold for more security and convenience.
5 questions to ask when investing in gold
It’s always important to fully understand any investment you are making, there is no such thing as a risk free trade, however, you can ask the right questions to help secure a stabilising contribution to your starter portfolio of investments.
Here are some important questions to get your head around before you get started.
1. How do I invest in gold?
There are three main ways to invest in gold:
- Buying physical bars
- Purchasing stock in gold miners
- Investing in gold ETFs/mutual funds and using futures or options
Buying physical gold (bullion, coins, jewellery) requires interacting with gold dealers rather than traditional brokerages, and will include additional costs for evaluation, delivery, storage and insurance. While investing in bullion is the safest of these options, the brick must be purchased in full (usually 1-ounce bar and 10-ounce bar) which can make it a pretty costly investment for beginners.
Purchasing stock in gold miners works by investing in companies that mine, refine and trade gold. You can use a brokerage account to buy company stocks and share in the company dividends and profitability.
Gold exchange-traded funds (ETFs) are shares made up of assets backed by gold – what you own from your purchase is a small part of a gold-related asset only and not anything physical.
It’s an affordable way to achieve the same long-term stability of gold, offers more cash flow options than physical gold and minimises the risks seen in individual gold stocks.
Because you are buying a gold asset, not the real thing, the value of gold mutual funds and ETFs may not directly match with the market price of gold, and these investments may not perform exactly the same as physical gold. It’s important to read the terms and conditions to understand when you can exit and what the selling conditions are and actively monitor holdings so you can release your options before they expire.
Each type of investing carries its own risks and benefits depending on your financial goals.
A more flexible option is to combine your gold purchase with fintech. Investing in gold with Nauggets gives you the option to buy physical gold at its current market rate with zero commission and multiple options to store it either at home or in secure facilities.
2. How much gold should I invest in?
No matter what form of gold you choose, most advisors recommend you allocate a maximum of 10% of your portfolio to it.
Some high-end investors will allocate as much as 15% of their basket of securities to gold, but everyone has to start somewhere. You can go for 3% first, then increase 5% after a period of time you’re comfortable with and continue the process until you are content.
Since you’re investing to offset your vulnerability to risk on the market (i.e. your volatility), it helps to spread your investments among equity, debt and gold.
Nauggets offers a gold solution for everyone, not just the traditional high-end investors so you can start with as little as $10.
3. Where do I keep my investment?
The location of your gold will determine how quickly you can access it. Typical options are:
- A bank safety deposit box
- Home safe
- Precious metals storage services
The platform you buy gold from may also have options through verified suppliers if you want to keep it elsewhere which can be especially helpful if you buy from overseas.
4. When should I buy gold?
The biggest value in gold is to hedge against a financial crisis or recession, this is a far bigger threat and much more worthwhile to guard against that inflation alone.
For this reason, the best time to buy gold is if there is a looming recession or financial crisis. It’s safe to stay up to date on the price of gold and buy away from periods of high inflation, when gold value is at its highest and savings are at their lowest.
Precious metal investments are intended to pass on to the next generation, rather than liquify for cash in retirement, so buying at any time and holding onto your asset indefinitely will insure a gain for whoever you pass them onto. Platforms like Nauggets offer the option to sell your investment at any time or hold onto them permanently.
5. Where can I buy gold?
To ensure you are buying quality gold, it’s important to only complete transactions with reputable institutions on your investment, as is the case with any investment.
Some dealers or brokers will add a commission on top of the premium for the gold itself, so scouting for sources with little to no extra charges will make the most of your investment. Storage considerations and broker fees are also costs to consider as you scout for providers.
Make sure the provider you transact with gives you the flexibility you need to make your investment work. The overall aim is to grow your hard-earned savings and minimise your vulnerability to risk, which starts with a trustworthy and capable provider.
Buying gold online is one of the most convenient ways to invest, but respectable suppliers who are adaptable to your needs may be a challenge to find.
At Nauggets we’re making gold accessible for everyone, not just the rich and those with the right connections. Using online technologies we can make even the smallest investment amount work towards your future and provide the reputable institutions you need to make a secure purchase.
Gold has proven itself as a solid investment against hardship for centuries. While there are many different ways to own gold from bouillon, coins and jewellery through to stocks and paper assets, new financial technologies have started to open up even more options that make buying gold straightforward and affordable for beginners.
If you are interested in understanding your fintech gold buying options and seeing how easy and flexible modern gold purchasing can be, contact us. We’ll help you strike gold in your financial journey.