Gold investing options beginners should know
Despite ongoing inflation, rising interest rates and a tumultuous stock market, gold remains a steady investment choice in 2023 for anyone looking to protect themselves against volatility.
If you're looking to diversify your portfolio, you may be considering gold, too. Not only has its value grown this year (nearly to record highs) but it can be a good hedge against inflation and uncertain market conditions. For beginners, investing in gold may be different from other investment types, and your strategy can vary depending on your long-term financial plan.
Below, learn more about investing in gold today. You can also explore more options that may suit your investment goals with a free information kit.
3 ways to invest in gold as a beginner
If you're new to gold investing, there may be more options for getting started than you think. Here are a few common ways to begin adding gold to your portfolio:
Gold IRAs
An IRA, or individual retirement account, is designed to maximize retirement savings. IRAs generally fall into three categories: traditional (funded with pre-tax dollars), Roth (using already-taxed money, allowing you tax-free withdrawals), or SEP (an option for entrepreneurs and business owners).
Gold IRAs offer the same advantages as these other IRAs; they just hold gold and other precious metals instead of stocks and bonds. The main difference is that they're self-directed accounts and come with a few more requirements from the IRS — such as where your gold comes from and where you keep it.
To invest using a gold IRA, you'll need to work with a custodian. This is a company that can help you set up your account so that you meet those IRS rules, and assist with storing the gold.
Learn more about how you can invest in gold today with a free investment guide.
Gold ETFs
If you're already familiar with traditional stock and bond investing using funds, a gold ETF (exchange-traded fund) may be a good choice.
Gold ETFs are designed to track the underlying price of gold, generally by investing in physical gold or shares of gold companies (think: gold mining companies or their financiers). Either way, when the price of gold increases, so should the value of your gold ETF.
These can make good options for beginners because you can buy and sell your gold ETF shares on an exchange, just like you would other ETFs. Plus, they offer a lot of liquidity. Because you're not actually responsible for storing any physical gold, you can easily make trades anytime you want.
Physical gold
Investing in physical gold may be the option that first comes to mind when you think of gold investing — but it may also be the most cumbersome. Typically, buying physical gold means purchasing it in the form of bars or coins (types of gold bullion). With physical gold, the value of your investment depends wholly on the price of gold as an asset.
If you buy physical gold, you should make sure you have a plan for its storage and insurance. Depending on your preferences, this may range from keeping a safe in your home, opening a safe deposit box at the bank or even working with a third-party company for safe-keeping.
The bottom line
Investing in gold is a good way for anyone to diversify their portfolio and safeguard themselves against economic uncertainty. Given today's high inflation rates and growing concern over a potential recession, buying gold could help you mitigate losses in other markets.
Just remember, gold is a great store of value, but it doesn't offer the same growth potential as traditional stock and bond investing. Experts typically recommend keeping any individual assets to around 5% of your overall portfolio — so you can reap the benefits of diversification while still meeting your long-term investment goals.
If you think investing in gold could be a good way to diversify your portfolio today, learn more with a free investor kit.
