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When you purchase gold as an investment as part of your retirement savings, you’ll enjoy a long list of benefits, including portfolio diversification and protection against financial crises. But, what should you keep in mind when you’re planning your precious metals investment, and what products to buy? Here are 7 helpful tips about gold investing.
1. Only invest in physical gold
Is there a difference between renting your home and owning your home? You can get evicted by your landlord, but nobody can move you out of a home you own. This is one of the best ways I found to explain the difference between physical gold and paper gold.
When you have paper gold like a gold ETF, you are holding shares in a financial company that owns some gold. You don’t have gold. If the financial company gets into trouble, your investment goes down with it, regardless of the value of gold at the time.
Bullion is an imperishable investment, whereas a business can go under and shareholders could risk losing everything. You don’t have that worry when investing in gold bullion: an ounce of gold will always be an ounce of gold.
When you invest in paper assets like stocks or bonds, you are taking a risk related to the company you invest in hopes of scooping a reward. When you decide to acquire gold, do what central banks do: hold the real, physical gold—don’t be left holding worthless paper certificates of gold.
2. Remember your investment goals
When you’re investing your hard-earned money, it’s crucial that you set clear goals and stick to them. This is true for any investment, including gold.
Before buying gold or any other precious metal, develop a retirement plan. Are you investing in gold for the long term as part of a Gold IRA? In how many years will you retire? How much money do you expect you’ll need during your retirement?
Once you have determined your goals, which could be growth, protection, or diversification, stick with your decisions. Don’t abandon your strategy on daily market changes and always consult your trusted precious metals advisor before making any further investment decisions.
3. Avoid third-party risk
When you invest a portion of your wealth in physical gold, you are in full control of those assets. Money invested in stocks and bonds is in the hands of Wall Street and the banking system, exposed to third-party risks such as insider trading and manipulation. Meanwhile, with physical gold, you own a tangible asset, one you can hold in your hands.
If you purchase gold via a Gold IRA, your metals will be stored at a depository under your name. Depositories allowed by the IRS to hold precious metals in IRA accounts are fully insured by Lloyd’s of London, the world’s oldest insurance company. They are also highly guarded and provide the optimal level of security, including a restricted entry in addition to monitoring and recording of all activities.
This means your IRA custodian and the depository are responsible for your metals backed by an insurance policy. You’re also welcome to visit the depository and inspect your gold at any time.
If you buy gold for direct delivery via a check or wire transfer, you can choose where to store the metals, and we can help review your options with you.
4. Buy the most liquid coins and bars
When it’s time to sell your physical gold bullion, you want the transaction to be a hassle-free experience. For instance, it’ll be more difficult to sell a 1 kg gold bar than a 1 oz gold bar. You also want to choose coins from reputable government mints. Their coins are guaranteed by the government and therefore highly sought-after by both investors and collectors.
5. Add to your gold investments over time
Physical gold protects your wealth against financial crises, inflation, and political uncertainty. When you contribute to your retirement savings over time, it’s important to also keep investing in precious metals to ensure that your wealth stays protected by continuously keeping your portfolio diversified.
6. Buy and sell your gold through a respected and reputable dealer
Would you rather buy your Chevy from the dingy dealer down the street or from an authorized dealer? Who would be most likely to sell you a quality product and guarantee your satisfaction?
When you are buying or selling physical gold, you should make sure that you are working with a precious metals dealer you can trust. Look at how long they have been in the business and check their reviews. A trusted place where you can read about businesses, check their reputation, and read consumer reviews is the Better Business Bureau.
7. Sit back, relax, and enjoy your gold investment
Most investments in gold are long-term. The reason is simple: Gold is the ultimate store of wealth, preserving and growing your purchasing power. When you own gold, you feel the difference. You own an asset that has no third-party risk and gives you complete protection and growth against governments debasing their currency and against any type of geopolitical risk.
Just look at how hard Warren Buffett works and how any of our clients and anyone holding gold during the last two decades beat the returns of Buffett’s company without lifting a finger.
Now that you have started your gold investing, don’t worry about the day-to-day movements in the gold price—the precious metal has a 5,000-year track record of protecting and growing wealth over time. You’re safe.