3 Things To Consider Before You Invest In Gold

Most of us are eager to prevent stagnation when it comes to our finances, and look to investment as an opportunity to grow our wealth. Gold is a popular commodity to invest in as it’s generally considered to be low-risk. Unlike paper money, there’s only a finite amount of gold in the world – 208,874 tonnes of which has been mined – which helps it to retain its value over time.

Despite gold generally being considered a safe bet, no investment is entirely risk-free, and gold won’t be the right option for everyone. To figure out if it’s likely to benefit you, here are three things to consider before you make the decision to invest in gold.

Check out these investing videos and articles:

Article: What ORDER To Invest In Step By Step Guide For Beginner Investors
Printable: Investment Property Savings Tracker
Article: Are you ready to start investing?
Article: Top 8 Investing Mistakes Every Beginner Should Avoid
Article: Should You Pay Off Debt or Invest?
Video: What ORDER To Invest In [Step-By-Step Guide For Beginner Investors]
Video: 5 Things To Do BEFORE You Start INVESTING

Your investment goals

While the decision to invest is a sensible one, it’ll only prove lucrative if you know where to put your money in order to achieve your financial goals. This means identifying exactly what you want to get out of your investment, such as your reasons for investing, and how much of a profit you hope to make in the long-term.

People tend to invest in gold to keep their finances stable and diversify their portfolio, rather than to make a huge profit. So, if your core investment goal is to protect yourself against rising costs of inflation, this may be a worthwhile investment for you. Although, in 2020, the average return on gold investment was 24.6% – the second-highest return amongst other investment assets that year – so while it shouldn’t be your sole reason for investing, financial gain is possible.

Ways To Save Money:

Here at Freedom In A Budget, I am all about saving money! Here are some of the EASY ways that I save money:

Rocket Money Budgeting App: Easily cancel unwanted subscriptions! 80% of people save money by using Rocket Money to find and cancel unwanted subscriptions!
Upside App: Earn 20 cents per gallon on gas cash back when you download the app and use code FIAB20.
Fetch Rewards is a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s it. Really. Free gift cards on groceries on thousands of products every day, no matter where you get your groceries. Just scan your receipts and get gift cards from retailers like Amazon, Target, Ulta, Applebees.
Rakuten: Rakuten is my to go way to earn Cash Back from over 2,500 stores like Macy’s, Amazon, Sephora, Walmart and much more. Join Rakuten today for free, and you’ll get a $30 Cash Bonus to get you started! Every three months, you’ll get a Big Fat Check in the mail or a PayPal payment just for shopping.
Budget Templates: Excel budget templates with pre-populated categories and formulas to keep you on track with hitting your financial goals.

Best place to keep your emergency fund to earn interest

If you have UNDER $5,000 in savings, switch to CIT Bank’s Platinum Savings Account with 4.65% APY

If you have OVER $5,000 in savings, switch to CIT Bank’s Platinum Savings Account with 5.05% APY

Associated Risks With Investing In Gold

Few rewards come without risk, but you don’t want to put yourself in a position where you might lose more money than you can afford to. Despite gold’s ability to retain its purchasing power, it’s not entirely immune to economic or political influences. Plus, there’s the risk of investing in counterfeit gold, and the insurance and storage costs that come with buying physical gold bullion.

Just how risky your gold investment will be will depend on the strategy that you use – while physical gold comes with all those upfront costs, it does allow you to be the sole proprietor of a tangible asset. In contrast, if you choose to invest in stocks, you’re largely reliant on a company’s performance, which will inevitably pose more of a risk.

Potential Strategies With Investing In Gold

There are different ways that you can choose to invest in gold, and the right one for you will depend on what you want to get out of your investment. Many investors choose to purchase physical bullion bars and coins for that peace of mind that comes with owning a tangible asset. This is a great strategy if you’re simply looking to preserve your wealth and protect your finances.

As we know, you can also invest in gold without physically owning it. For example, you can invest in an exchange traded commodity (ETC) – a type of collective investment that functions much like stocks, whereby the price of the market (and your potential return) fluctuates. While this comes with greater risk, it’s a better investment option for those looking to luck out and make a profit.

No matter the strategy you choose, it’s important that you don’t put all your eggs in one basket. Experts recommend that you devote a maximum of 10% of your investment portfolio to gold in order to mitigate risk.

Conclusion With Investing In Gold

Gold is a commodity that is known to retain its value and hedge against inflation, making it a smart investment if you want a greater sense of financial security. It may not be the best option if you’re looking to make a significant profit, but it’s a solid investment that can help to stabilise your portfolio. Devote 10% of your portfolio to gold, and use a variety of different strategies to get the most out of your investment.

Some of the links in this article are "affiliate links", a link with a special tracking code. This means if you click on an affiliate link and purchase the item, we will receive an affiliate commission. The price of the item is the same whether it is an affiliate link or not. Regardless, we only recommend products or services we believe will add value to our readers. By using the affiliate links, you are helping support our Website, and we genuinely appreciate your support.