The best gold investments for beginners
As an investor, it is important to diversify your portfolio with different asset classes. This allows you to maximize your returns while providing stability in times of economic uncertainty. One such asset is gold.
Gold provides many benefits to investors, such as hedging against inflation, delivering steady, reliable returns and offering a safe haven in times of economic crisis. Gold has been especially popular this year as investors seek to shield their wealth from persistent inflation and a long series of interest rate hikes. But what's the best way to add gold to your portfolio?
Whether you're brand-new to investing or just new to gold investing, you have plenty of options to choose from. But some are better to start with than others.
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If you're looking to add gold to your portfolio, consider the following investment types.
Many experts recommend gold exchange-traded funds (ETFs) for their ease of use, efficiency and relatively low costs.
ETFs are pooled funds that invest in gold as their underlying asset. These funds track the price of gold, meaning as gold prices rise, the ETF's value rises with them. ETFs have low investment minimums, fewer fees than other investment types and create fewer capital gains — which means less tax you have to pay.
Unlike physical gold, investors can buy and sell gold ETFs on the stock exchange like any other stock, offering a greater degree of liquidity and convenience. For all of these reasons, investing in a gold ETF is a simple way beginners can add gold to their portfolios.
Gold mutual funds are similar to gold ETFs. They're also pooled investment funds, but instead of holding gold as their underlying asset, they invest in shares of companies in the gold mining industry (companies that mine, process or sell gold).
While gold ETFs passively track gold prices, gold mutual funds are actively managed by investing professionals whose goal is to beat the market. This has the potential to lead to greater gains, but it also comes with greater risk and higher fees. It's important to weigh these pros and cons when deciding whether to invest in a gold ETF or gold mutual fund.
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One of the most common goals among investors is putting aside money for retirement. You can do this with gold through a gold individual retirement account (IRA).
Like other IRAs, gold IRAs allow you to contribute money you can withdraw when you retire. Depending on the type of gold IRA you choose, you'll enjoy tax benefits now (on your contributions) or later (on your withdrawals). This makes them a great way to shore up your retirement savings while also enjoying the many benefits gold offers.
Physical gold (or bullion) is one of the most popular forms of gold investments. You can purchase gold coins and bars from a wide variety of dealers and online retailers. They're easy to understand, easy to sell for cash and come in different sizes and weights, allowing you to tailor your investment to your budget.
That said, physical gold can be more of a hassle than other gold investments since you must find a secure place to store it. It can also be costlier since it's sold at a premium, plus you must pay for storage and insurance for your investment.
Still, investing in gold bars and coins is a fairly straightforward process, which can be appealing to beginners. And some investors prefer the satisfaction and peace of mind that comes from owning a tangible asset that they can access at any time.
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Investing in gold can be a smart way to diversify your portfolio and protect your money from economic turbulence. And it doesn't have to be overwhelming. By investing in gold ETFs, mutual funds, IRAs or physical gold, you can get started with gold investing today and begin reaping the benefits this precious metal has to offer.