Investing in gold may be your best investment yet, but there are several things that you need to consider to make sure that you are on the right path.
You will be dealing with a great deal of money here and since this is an investment, you must guarantee yourself returns in the future, whether this is a short-term or long-term investment.
What are the things that you need to do first before buying gold?
How can you exercise caution while finding the best type of gold investment for you?
Here are the top five things you can do:
#1. Do your research on what types of gold you should invest in.
There are different types of gold that you can invest in. Although most people think that physical gold (gold coins or bars) are the best ways to invest in gold, know that you have other options which may be best suited for your investment goals. Here they are:
This is the easiest way to invest in gold as you can buy it from many gold dealers at low premiums. Comparing prices in gold bars is easier so you have a real good chance at finding the best deal. Read our in-depth buyers guide to purchasing gold bars by clicking here.
Gold Bullion Coins.
Another simple way to invest in gold as there are plenty of dealers out there for coins as well. The great thing about gold coins is you can work with any budget.
Most individuals aren't familiar with the term self directed IRA. This type of account allows you to place precious metals like gold and silver in your IRA account. This is perfect if you wish to rollover a 401k because these are backed by one asset class. We have a company that we highly recommend if you are considering anything like this. Read our review about this company.
Investing in gold certificates is not as straightforward as investing in physical gold, but this will remove complications when it comes to the delivery of gold and storing it.
Gold ETF's and Gold Stocks.
For investors who are used to investing in stocks, this is the best type of gold investment. It is open to anybody and it doesn’t take a genius to understand this investment.
This is probably the most complex gold investment you can make. It is also riskier too. This is better suited for people who have a good enough experience in making investments. Investing in gold futures can bring greater returns, but the risk should be understood first.
#2. Have questions ready when speaking with gold company representatives.
When buying gold, you will have to talk directly to gold company representatives. They will say anything to get you to buy from them, but you have to be smart about this. Make sure you ask the right questions and get the relevant information you need to make the best decision.
Know the terms.
If you don’t understand the terms they use like “spot,” “troy ounce” or “bid,” ask them. It is important that you know what these terms mean before you start buying gold.
Ask the price.
Knowing the price is one of the most important things because you’d want to know if you’re buying your gold at the best price. Asking prices from different gold companies is ideal so you can make a comparison.
Know the company’s background.
If you will be dealing with this company, then you have every right to know who you’re dealing with. Ask for the company background including its years in business, number of clients, BBB rating, and etc.
Aside from asking questions, do your homework as well. Research on the type of gold you’re buying, the premiums, the usual price range and also, the company you are dealing with.
#3. Decide how much you plan on purchasing.
This decision will ultimately depend on you and your budget. But some insight on the ideal percentage to spend will be helpful in your endeavor. In buying or investing in gold, a rule of thumb is to spend 10 to 30% of your assets.
Determining your percentage will depend on your economic, political and financial standing. Your safest bet is at 20 percent.
#4. Are you buying for the short term or long term?
Before buying gold, you must decide whether this is a short term or long term investment. You must know that there are specific types of gold that is better used for a short term or long term investment.
With short term gold investments, you’re better off buying gold bullion coins or bars for the reason that their prices keep moving up. Hence, when you decide to sell it later, you’re sure to earn a profit. You can keep your gold coins or bars for at least two years before selling them.
For long term gold investments, it is best that you invest in grade-certified gold coins. In other words, these are rare American gold coins. These types of coins always outperform the value of gold bullion coins.
On the other hand, it is always your choice what type of gold investment you will make. Again, it will also depend on your personal preference and experience. In any case, gold will always be a lucrative investment to have.
#5. Where to store the gold after your purchase?
One of the worries when buying physical gold is where to store it once you have it. It is for this reason why some investors prefer buying other forms of gold. They don’t want to be bothered with the physical storing of these precious metals.
But if you prefer investing in physical gold, here are your different storage options:
- At home. You can store your gold at home but keep them at a minimum. For one, your home may be private but it is more susceptible to theft. You can also risk the gold being stolen while in transport to and from your home. Gold worth below $10,000 need not be reported anymore.
- Safe Deposit Box. This is a good option to store your gold as it is safer but still maintaining your privacy. However, renting a safe deposit box can put you back $100 to $300 a year.
- Precious Metal Vault. Usually, the precious metal vault is for corporate clients. The storage fee and insurance fee are cheaper and clients can deposit large amounts of gold. Precious metal vaults are very secure.
- Allocated Gold with Custodians. The custodian will hold the gold you bought. For example, if you buy 10 ounces of gold, the custodian’s system will put 10 ounces of gold under your name. That is your allocated gold. They will keep it in their own vault. There is a 100 percent guarantee from the custodian of your gold.
These are the five things you should do or ask yourself before buying gold. Be meticulous and cautious so you can make a good investment.
Editor's Note: If you are ready to learn more information about putting gold into an IRA, I highly recommend that you visit this website to get a free gold guide to learn more about these types of investments.