What to know before investing in gold
You may have already seen a commercial about it on television today. Or you heard about recent price fluctuations or how it can help with inflation. Chances are good that you've been reading and hearing a lot about gold lately, and the reasons why are clear. Interest rates are up, a recession is possible for later this year and stock market performance has been uneven. In this environment, many investors are looking for some stability, which this shiny, precious metal can easily provide.
But gold isn't just a reliable boost in the fight against rising prices. It actually has multiple benefits, depending on the investor and their personal financial situation. That said, like all investments, those interested should first familiarize themselves with the ins and outs of gold to get the greatest return.
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What to know before investing in gold
Gold is a worthwhile investment for many people of many ages in a variety of economic climates. That said, it helps to know the following three things.
Historically, there are better times to invest in gold
While you likely won't suffer from investing in gold whenever you ultimately decide to act, there are some better times to get started than others.
Right now, in mid-May 2023, gold prices have cooled slightly (down from near record highs in recent weeks). But that's not too surprising as gold prices tend to dip slightly around June, making now a good time to invest at a lower price. Other months when gold prices are low include January, March and October. That all being said, gold, just like any other investment, is difficult to time precisely. Fortunately, it's not known for huge ebbs and flows, so the price you buy it at is likely to stay steady for as long as you decide to keep it.
Learn more about investing in gold here now.
There are multiple investment types to choose from
You may already be "invested" in gold if you own jewelry, watches or other items. But that's not the only way to store your money in gold, even if it is the most popular. You can invest in a gold IRA, which can help protect your retirement savings by holding gold instead of traditional stocks and bonds. Or you can buy it in bulk as gold bullion or coins. You can also explore a gold exchange-traded fund (ETF), which essentially pools a variety of assets with gold as its underlying one. And if you want to be more aggressive (and are willing to take on more risks) you can explore gold futures, whose contracts investors purchase as another way to fight inflation.
The bottom line: If you're ready to invest in gold, explore your options to find the best type for your needs and goals. You'll have a lot to choose from.
It shouldn't supplant your other investments
Gold is not as much of an income-producing investment as it is a way to protect your money. As such, you shouldn't take all of your money out of stocks, bonds and real estate and instead dump it into gold. To get the most out of a gold investment, actually, experts recommend limiting that portion of your portfolio to just 5% to 10%. Gold generally keeps its value, so it will help balance out losses related to more volatile investments. You won't necessarily get rich by investing in gold, but you're not likely to suffer the major losses you could with other investments, either.
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The bottom line
In today's economy, many people are considering the benefits of investing in gold. This can be a smart move for millions, particularly if those investors take the above three factors into account. In particular, understand that there are some better months of the year to invest in gold than others (although this can always change in the future). There are also multiple ways to invest, so make sure you choose the right type for you. But also consider the right amount to invest, as gold should be a part of a diversified portfolio but not the full portfolio (don't go above 10%).
