How much money can you make by investing in gold?
Savvy investors are always on the lookout for ways to both grow and protect their money. This is especially true in today's economy, with stubborn inflation and decades-high interest rates designed to tame elevated prices. With the performance of stocks and bonds uneven, many have turned to alternative investments to help diversify their portfolio. One such asset is gold, with investments in the precious metal hitting an 11-year high earlier this year.
While the interest in gold is understandable, the exact benefit of putting money in the yellow metal may be unclear for some. As such, it helps prospective investors to know how much money they could make by investing in gold, as well as the other timely benefits the investment can provide.
How much money can you make by investing in gold?
You can make money from a gold investment, but it will take time. The price of gold was around $1,325 per ounce in October 2013, according to the World Gold Council, and is now worth around $1,9000 for the same amount — a 43% rise in value over the decade. So, if you bought an ounce of gold and kept it over 10 years you would have theoretically made around $575.
While those figures don't account for inflation, even incorporating a 2% annual jump would still show gold's ultimate value. A $1,000 investment, for example, would have needed to grow to $1,218 to be valuable, which it still has.
That said, gold is less of an income-producing investment and more of a long-term investment and portfolio protector.
"10 ounces of gold bought 23 years ago in 2000 would have cost around $2,800," Mel Mattison, CFP, financial services professional and consultant, previously told CBS News. "Now, a child born then would have almost $20,000, perhaps just enough for a down payment on a starter home. Clearly gold has outperformed inflation during that period. And that's the point, over the long-term gold will never let you down, at least it never has for the last two thousand years or so."
Learn more about the benefits of gold investing here now.
Other gold investing benefits to know
While the above figures clearly illustrate the dollar value of a gold investment, it's not the only way the precious metal can help. Specifically, gold can also:
- Hedge against inflation: Arguably its most well-known benefit, a gold investment can help hedge against the negative effects of inflation. The price of gold often remains steady during times of inflation. At the same time, the purchasing power of the dollar usually erodes. Because of this, a gold investment during inflationary periods makes sense.
- Diversify your portfolio: A portfolio made up strictly of stocks and bonds can be more volatile than many investors would like. Gold can help diversify that portfolio, then, when investors put some money into the precious metal. Just be sure to invest in the right amount (most experts recommend a maximum of 10% of your overall portfolio).
- Provide a tangible asset: Gold is a liquid asset that's easy to buy, sell and store in physical form. And for many who have seen their savings and retirement accounts take a hit in recent years, that could be an attractive feature.
The bottom line
Gold can be an income-producing investment, just not one that most investors can benefit from short term. Instead, the precious metal price tends to rise over months, years and decades. But while that can offer advantages long term, there are some more immediate benefits investors can take advantage of now. With a hedge against inflation, portfolio diversification and a tangible asset that you can easily buy, sell and store, gold can make sense for many investors now. Get started here today!
