For over thousands of years now, human beings have relied on gold as one of the most stable forms of investment.
It’s an asset that consistently appreciates in value, making it a good investment choice. Particularly during economic situations when the stock market is volatile or the economy is questionable, gold seems to reign supreme as a potential hedge against those instabilities.
There’s a number of ways to invest in gold. But, it’s not always that shiny, as investing in gold, even when you have the purest gold coin, may not always yield you the most satisfactory experience. Thus, to ensure you’re making the best decision, it’s a must to be equipped with all the information you have to know about investing in gold.
Before investing in gold, it pays to get to know these four things first:
There’ll Be Pushy Salespeople But It’s On You To Stay Away From Them
If you happen to encounter salespeople who are too pushy, it’s best to stay away from and say ‘no’ to them. Investing in gold is a huge decision to make, not one you can merely rush. Likewise, because it’s such an attractive investment opportunity, you’re sure to encounter high-pressure sales tactics and even fraud.
Remember, however, that even if you’re dealing with a legitimate salesperson giving out a legal and valid sale, you might still be pressured. A good salesperson is one who shouldn’t force you into making investment decisions.
Gold Stocks Aren’t The Same As Physical Gold
If you’re already familiar with investing in stocks, you may be more inclined to find comfort with investing in gold stocks or digital gold. This is an intangible form of investing in gold, unlike physical gold, like bars, jewellery, and bouillon. It’s, therefore, important for new investors to realize that investing in gold stocks and physical gold aren’t one and the same.
Essentially, when you invest in gold stocks, you could be investing in a gold mining company focused on gold production. But, you’re not actually investing in gold in itself. The value of your stocks and the profit you’ll earn would depend on the performance of that gold company.
Risks And Drawbacks To Investing In Gold Also Exists
While it may seem like an attractive investment opportunity, gold still isn’t a perfect investment form. Like all others, it also comes with drawbacks and risks that you need to familiarize yourself with. Getting to know what those risks are can help you become more prepared and confident with your investment decision.
Here some of the risks and drawbacks to investing in gold:
There are associated costs with storage and insurance, particularly if you prefer to invest in physical gold. These are added expenses that won’t be present had you invested in stocks instead.
Physical gold will only earn an income as soon as you sell it. Depending on the availability of buyers and the current state of the economy, it may take quite a long time to sell those precious metals. This is unlike investing in stocks, where you can automatically earn a quarterly dividend if the company performs well.
Liquidating gold can also be a long, tedious, and expensive process. For you to cash out, however, liquidation is a crucial step to go through. To achieve this, the gold may need to be shipped to a reputable dealer.
Be On High Alert When You Hear The Phrase ‘Low Risk’
There’s no such thing as a low-risk gold investment. Because gold isn’t a necessity, the risk attached to investing in that precious metal is always quite high. The third section above enumerating some of the risks should be more than sufficient to substantiate how gold is a risky investment, albeit potentially profitable.
Remember the basic rule in investments: the higher the profits, the higher the risks. To protect yourself from any of those risks, always ask for a risk disclosure statement first from the salesperson. If this risk disclosure isn’t given, then be on high alert and say no.
Final Thoughts
Over the recent years, there seems to be quite a lot of talk surrounding gold. There’s so much buzz surrounding gold investments, such that many are interested in investing in this precious metal.
Investing in gold is more than just the potential profits you’re going to earn from it. Rather, it also includes the possibility of strengthening your assets and diversifying such, so investors aren’t just placing their hard-earned money on cash-related reserves. With the information above, you should now be feeling more confident that investing in gold is, in fact, one of the best decisions you could make for your finances.