Most seasoned investors will tell you that having gold as part of your investment portfolio is always a good idea.
It is a secure investment to protect you against inflation and other economic uncertainties.
But buying gold doesn’t simply mean getting a few gold rings or earrings and considering that to be an investment.
In fact, buying gold jewellery isn’t a lucrative investment at all. Most pieces of gold jewellery will not retain its value after they're bought.
There are plenty of other ways you can get into investing in gold. Here are 6 alternatives:
1. Physical gold
This means buying gold bars or coins. Not jewellery. You can purchase the bullions or coins from a reputable source and have them stored in a safe deposit box at a bank or a secure location of your choice. For gold bars, you can get as little as an ounce (or a fraction of an ounce) to several hundred kilograms.
2. Gold mining stocks
If you’re really into buying stocks, you still shouldn’t keep all your eggs in one basket. Most investors will buy stocks from various industries. And some will also buy gold stocks as a method of diversifying. But don’t forget, owning stocks in companies that mine and sell gold comes with its fair share of risks because its pricing is still subject to operating costs and other variables.
However, this investment can pay off too. When gold rises significantly, the stock prices can also outperform physical gold prices.
3. Gold Exchange Traded Funds
Not sure which type of gold stocks to invest in? Then Gold ETFs are for you. Gold ETFs invest in many gold stocks rather than just one, giving you a wide range of investments in one fund. There are ETFs for bullion, mining, and gold companies. However, when investing in any fund, management and trading fees apply.
4. Gold mutual funds
This is similar to ETFs, but funds are bought and sold through mutual fund companies or brokerage firms. Annual management fees are usually more expensive than for ETFs. However, gold mutual funds have more hands-on management as fund managers buy and sell gold stocks to get the best possible returns for their investors.
5. Gold options
This is a slightly more sophisticated and complicated product to invest in. This is normally done by investors with more trading experience and a higher risk tolerance. Gold options allow investors the right to buy gold at a certain price before an expiration date. What this means is that they can put in a call or put option within their time frame. If they think the price of gold will go up, they will buy call options and buy put options when they think prices will drop.
6. Gold futures
While options give traders the choice of buying or selling gold at a certain time (and the right not to if they choose so), futures must be bought or sold by the investor at a specific date. As another high-risk product, this requires a higher level of sophistication of investing. Futures holders can choose to close their position before the determined expiration date.
Will you be investing in any of these gold-related investments? Let us know in the comments.
Read more articles related to investing and gold here.