Gold bars and coins for beginners: Pros and cons to know

If you're a beginner gold investor, one of the most important decisions you'll make is the best type of gold investment for you.

Investing in gold (in any form) can be a good way to hedge against inflation and keep your portfolio stable during periods of market downturn and recession — but the way you choose to invest can make a difference, too. For some investors, owning gold bars and coins can be a good way to fit the precious metal into their financial plan and budget. But it's important to understand the benefits — and drawbacks — of a physical gold investment before you buy in.

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Gold bars and coins for beginners: Pros and cons

As a beginner to gold investing, it's important to do your research before you make any changes to your broader investment plan or portfolio. If you're thinking about buying gold bars and coins, here's what you need to know.

Pros of gold bars and coins for beginners

These are a few of the reasons physical gold bars or coins could make sense for beginners:

• Tangibility: Buying a physical gold bar or gold coins is unique from other investment types, like stocks. Some investors find value in the ability to hold their gold investment or display it at home. This can be especially true if you choose a collectible gold item.
• Liquidity: It's smart to invest with the intention of letting your asset add value to your portfolio over time, but unexpected circumstances could make it necessary to sell your gold. Because physical gold has been a valuable commodity for centuries and is recognized across the globe, you're likely able to sell your gold bars or coins for a fair market value if you need to.
• Different purchase options: With different methods available to buy gold bars and coins, you'll have the ability choose the right one for you. You might find a dealer online, in-person or seek out a seller offering, for example, a specific gold coin you want. You may also choose to work with a gold investment company to help you buy high-quality gold bullion that qualifies for a gold IRA. Just make sure to do your research beforehand to ensure you pay a fair price.

Learn more about gold investing today with a free investors kit here.

Cons of gold bars and coins for beginners

You should also be aware of the downsides of choosing a physical gold investment over gold stocks or other investment options that can diversify your portfolio. Here's what to know:

• Other options may be more familiar: You won't be able to buy your physical gold through a typical brokerage. Because of the added research and time involved to find a reputable seller, this type of gold investment may not be for everyone. As an alternative, you may choose to invest in gold indirectly by buying stock in gold mining companies, either individually or through a fund, like a gold ETF — which you can typically do through any stock brokerage.
• Added costs: You will pay a markup on the spot price of gold when you make your purchase, but that isn't the only fee you'll incur. Costs for additional insurance and storage of physical gold can vary widely depending on your individual investment. Plus, if you choose to invest your physical gold in a gold IRA, you should account for fees you'll incur to work with an IRS-approved custodian.
• Risks: Some bad actors may be looking to take advantage of gold investors with unreasonable prices or false promises about gold's potential value. Before you buy from any gold dealer, look for past customer reviews, review prices and details about your specific gold purchase and watch out for common red flags.

Considering investing in gold today? Find out more about the precious metal with a free investment guide here.

The bottom line

Investing in gold may add value to your portfolio long-term and help you weather different market changes over time. If you're thinking about investing in gold bars and coins directly, make sure you do your research about the buying process, how physical gold can differ from other gold investments and what to look for in a reputable seller. 

Before making any changes to your overall financial plan — especially as a beginner — you may also benefit from speaking with a financial advisor or trusted financial expert who can help you understand the benefits and risks for your situation. Find out more to determine whether a gold investment is right for you with a free information kit here.