MoneyLife

How To Invest in Gold (and Why You Should)

By LaKenya Hill
how to invest in gold

Gold. You can wear it and… Invest in it? Believe it or not, there are many ways to invest in gold. You can invest in gold stocks, buy into a cost-effective gold exchange-traded fund (ETF), and even purchase gold bars. Let’s talk not only about why you should invest in gold but also about how you can invest in gold! 

4 reasons why you should own gold

Gold is a great investment, but why? Here are 4 simple and straightforward reasons why you should add gold to your portfolio and how to invest in gold starting today.

1. Diversified investment

Gold tends to move differently than other more traditional investments such as stocks and bonds. This is especially true given the nature of interest rates imposed on gold. If interest rates increase, stock and bond prices tend to decrease. On the other hand, the cost of gold tends to increase alongside higher interest rates. This means gold can diversify your investments in a way that offsets some losses that you might otherwise experience in times of crisis. 

2. Safe investment during times of geopolitical uncertainty

Speaking of times of crisis, gold tends to thrive during times of geopolitical variety. Things like stocks and bonds thrive on stability, but investing in gold does not follow these trends. Gold thrives during periods of instability. This can help provide peace of mind because you’ll be able to rely on at least one of your investments during uncertain times. Gold has thrived as an investment during the COVID-19 pandemic whereas other types of investments experienced major instability.

3. Retains value

Even after being discovered thousands of years ago, gold remains a commodity. It seems that gold continues to hold its value over time no matter what happens. This means that investing in gold will likely provide you with some profit regardless of how hostile the market might be at the time, especially since the supply of gold is slowing down. Gold holds its weight as an asset. 

4. Gold is always in high demand

More and more investors are seeking out gold as an investment because they are realizing its immense and unwavering value. Also, as emerging markets increase their wealth more and more, the demand for gold continues to increase. As demand increases, supply decreases, meaning that the value of gold continues to increase. If you combine the increased demand for gold with the fact that it retains its value regardless, gold is one of the best investments to consider, especially if you are trying to start building your portfolio early or even investing in your child’s future.

Where can I buy gold?

There are three ways to buy gold. While there is no need to have a safe full of gold bars on hand, that is an option available to you. Here are some ways that you can buy physical gold as well as how to add gold to your financial portfolio. 

Remember that you can implement all of these gold-buying options or you can just pick one of these options. That’s the great thing about gold! You have both physical and intangible buying options depending on your level of comfort. 

Buying gold bullions

Gold bullions—or gold in its physical bar or coin form—can easily be purchased, which is why many people choose this option. Gold comes in various sizes, ranging from a quarter of an ounce wafer to a 400-once brick. Gold bullions can often be purchased from precious metals dealers, but sometimes, a broker or a bank can sell you gold bullions as well. 

It is important to ensure that the gold bullions you’re considering buying are being kept somewhere safe. Double-check that the gold is also insured by the bank. The safest place to keep gold bullions is either in a safe deposit box at the bank or locked away in your own personal safety as physical gold is riskier than intangible gold. The easiest way to purchase gold is in the form of coins, but gold jewelry is also an option. 

Though it can be worn and easily passed down, gold jewelry is typically not the best option if you are looking to purchase gold just for investment purposes. That’s because it is usually combined with other metals for aesthetic purposes, which diminishes the overall value of the gold. Additionally, the retail price of gold jewelry is usually higher than the actual cost of the gold once it is melted down into pure gold.

Buying gold ETFs 

Purchasing gold in the form of an ETF is a great low-cost way to break into the gold market. Gold is bought and sold similarly to the way stocks are bought and sold. Stocks in gold rise and fall faster than the actual price of gold, which adds a bit of a risk to gold ETFs especially compared to gold bullions. Risks aside, ETFs are ideal for diversifying your portfolio because you tend to get good returns on gold over time. 

Investing in gold mining stocks 

Another option is to invest in gold mining companies. Gold mining companies belong to the industry of geologists who find and sell gold. This industry can be very volatile because it fully depends on geologists’ ability to discover gold in nature.

However, with adequate research, you can look at a gold mining company’s dividend payment history to help assess how stable their gold stocks are. Gold mining is a good way to complement your other investments because the growth is dependent on the earnings of the gold mining company. 

Decide investments alone or allow MoneyLion to help you! 

Like most investments, gold has its benefits and its drawbacks. Gold has proven its ability to stand the test of time as a commodity while keeping up with more modern ways of investing. The key is educating yourself on the reasons why you should invest and deciding which option is best for you. 

While some people find it fun to figure everything out on their own, there are many benefits to seeking professional help and asking others to manage your investments for you. The most important part is discovering a company that will invest for you while keeping your needs and your goals in mind.

MoneyLion offers you the opportunity to take advantage of cost-effective investments such as gold. With no management fee, MoneyLion can help you start investing while still allowing you to feel in control of your money. Sign up for MoneyLion auto-invest with as little as $5 today!

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