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When you set about forming a personal finance strategy, there is certainly no shortage of advice available. Whether it’s tips for how to make money more effectively, advice on setting up a retirement fund, lessons on saving, or investment strategy, there is a great deal of information available at your disposal. This information, taken together and studied carefully, can indeed help lead you to a strong personal finance strategy. However, it also pays to look into a few more unique financial strategies.
One example of this sort of strategy might be investing in gold, which seems to be an increasingly popular option among younger demographics, and which may well be particularly relevant in the current world economic climate. If gold investment is a new concept for you, here are a few basic tips on who and why to get started.
How Do You Invest?
The first question for people who have never invested in gold before is simple: where do you go to invest? Gold operates differently than other investment sources, and therefore must be approached in a different way. Generally speaking, you need to find a gold bullion website such as BullionVault that allows the easy, secure purchase, storage and sale of gold. Gold prices at BullionVault and similar sites are updated continually, which means that you have a very reliable way of reading the market and controlling your investment. At these sites, you can buy and sell virtually any amount of gold bullion at any time.
Why Invest In Gold?
So, why should you bother investing in gold? Generally, the price of gold is not prone to sharp rises or drops, which means that this is a low risk, low reward type of investment. For that reason, if you are looking to make significant financial gains, you may want to find a different sort of investment opportunity. However, if you are looking for stability of your finances, gold may be worth considering. People tend to invest in gold in order to protect their wealth, as putting money in gold protects that money from potential decreases in value due to currency depreciation and economic shifts.
Should You Invest Now?
Given the strategy reasons listed above, is now a good time to invest in gold? Again, that depends on what exactly your financial strategy may be, but with regard to the current economic climate the answer is difficult to determine. On the one hand, with the U.S. dollar strengthening slowly but surely, the price of gold may stop growing as quickly as many expected it to in the coming year. This is because Forex traders and investors could conceivably invest in the dollar as a direct alternative to gold. On the other hand, however, the price of gold has risen consistently for over a decade without interruption, which means you should at least be assured you won’t experience losses.
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Investing in gold can be a good way to diversify, but I would avoid going all in like I’ve seen quite a number of people do lately. As with any investment, it’s key to do your research and make sure you know how it fits into your strategy. I’ve thought about investing in it in the past but have yet to pull the trigger.
I currently don’t own any gold but I think as long as you keep it to less than 5-10% of your portfolio, it can help you diversify. I know a lot of traditional(older) investors do not like the thought of investing in gold, but if you invested any time in the past 20 years you’re probably pretty happy.
Gold is at an interesting point right now in the financial landscape. It is pretty high due to all the other crazy stuff going on in my opinion, but maybe it has further to go. No one knows 🙂
For some reason when I was little I was obsessed with gold and I would always check it’s prices. I remember when I was around 5 years old, the price was in the $300/oz range. Enough said, haha.
I think it’s a very interesting investment though like you mention. I might add it to my portfolio but I’ll have to do some thorough research first. I know I got slaughtered on the bogleheads forum once for asking if it was a good idea to invest in gold.
I traded a little gold about 6 years ago, it was around the $600 mark. I cashed in and went on to currencies. Would have a lot of money right now… It is a good edge against a weak dollar but prices are really high right now, and so is the risk.
I agree with you Pauline. Prices are a little high right now, but people have literally been saying that for the past 20 years, haha. Anytime you are trying to get above average returns though, you will undoubtedly take on above average risk.
It’s funny… one of my friends (who has no idea that I have a PF blog) said to me in a drunken state at the weekend… ”INVEST IN GOLLLLDDD… the economy is f***ed” haha (you had to be there)
Usually, drunk investing tips are the best! Haha not! I would honestly be pretty apprehensive to invest in gold, but I mean it keeps going up. I don’t really understand it that well either though.
I have roughly 20% of my (pathetic) wealth in gold and silver. I own shares in GLD and I own physical gold. I agree with the sentiments of the article and the comments here: every portfolio should have at least some gold, but no one should be all in.
There will be a currency crisis in the US (unless you think the Fed/government will stand by and watch as the banks fail and people lose their deposits/pensions/IRAs). The US will then print its way out of its situation, because it’s the easier political choice, even though defaulting on its debt would be better. Gold is a great play here because it’s the last safe haven left. No Euro, no dollars, etc. Gold has all of the attributes of a currency, hence why it has historically been used as one. With all of the others currencies failing, it will be the currency of choice.
How much of this is already priced in is anyone’s guess. Investors are still buying US treasuries, so that indicates to me that people don’t realize how bad the dollar is yet. That leaves some room for gold to go much higher.
I think that’s fine, and if you’ve followed that strategy for a while you’ve made some pretty good money. I’m not so sure though about gold heading up and up.. Regardless of what’s going on with the economy, gold has all the tell tale signs of a bubble. Like with any bubble, prices rise until they cannot be supported anymore.
But even if an investor like yourself feels as strongly as you do about the direction of gold it’s smart not to put too much into it.
Gold has always been a great investment. It’s good for long-term investors who don’t mind getting returns quickly.
Thanks for stopping by.. not sure I quite understand what you mean though??