Investing in gold – or any other market – should never be done without the proper preparations. Following some basic steps is crucial, and doing extra research is advised. Although there is no foolproof plan, the following basic guidelines will go a very long way.
What to Invest in First?
There are nearly a dozen different ways to invest in gold and other precious metals today. Mining stocks, physical coins or bars, gold ETFs, certificates, and futures contracts are just some of the opportunities to explore. This makes life difficult for newcomers, as it is impossible to make a “right” or ‘wrong” choice. It all depends on which vehicle one is most comfortable with.
In this modern age, the majority of newcomers tend to opt for mining stocks, as they have pretty decent potential. Most companies active in the precious metals industry will often see their value appreciate over time. It is not the same as investing in bullion directly, but it is still an interesting way of being exposed to the gold industry in a different way. It is always advised to make smaller investments in different aspects of the industry, but that is a matter of personal preference.
How Much Should I Invest?
This is always the hardest question to answer. Investing too little will not yield significant results, yet investing too much is a very big risk. Finding the middle ground is, once again, a matter of personal preference. Although it may not seem like it, gold and other precious metals remain volatile investments. As such, the price fluctuations can easily cripple a portfolio when an investor goes in too deep.
The solid advice is to never invest more than 10% of one’s entire portfolio in the same industry. That goes for gold and other precious metals as well. Despite being classified as a store of value, gold has seen price swings of $100 and more in a day. Overcoming such discrepancies can take weeks, if not months.
Cost-averaging one’s investment down is a solid strategy, yet it requires multiple smaller purchases over time. Doing so will lower the average price at which one invested, increasing the potential for future profit.
Is now a Good Time to Invest?
That is the million dollar question. There is never a good nor a bad time to invest in anything, depending on one’s expectations. Gold is a long-term investment first and foremost. That being said, the best option is, as mentioned before, to cost-average down whenever possible. Making multiple smaller purchases will improve one’s portfolio significantly , and allow people to get acquainted with the investing business.
How one decides to invest in the long run, is a personal choice. There is no “most-follow guide” when it comes to adding gold to one’s portfolio. With the necessary knowledge, proper expectations, and a ton of patience, anything can be achieved. That applies as much to gold as it does to any other form of investment one can think of.