Are you planning to invest in gold or other precious metals? Are they worth being part of your portfolio?
The precious metals usually recommended for investment purposes include gold, silver, palladium, platinum, and copper. There are many advantages to investing in precious metals, which provide a perfect balance for your portfolio, especially during economic downtimes or crises.
If you’re still having doubts about investing in precious metals to boost your investment portfolio, keep reading to learn more about the specific benefits of doing so.
1. Grow Your Retirement Investment Portfolio
Individual retirement accounts or IRAs contain different types of assets you can invest in with the help of a custodian institution, like a brokerage or bank. Some of the common assets in IRAs are stocks, mutual funds, bonds, and exchange traded funds (ETFs).
If you have a self-directed IRA, then you can hold more assets such as real estate and precious metals. Hence, you can grow your retirement investment portfolio with the latter.
Sourcing precious metals for investment is made a lot easier with the help of companies such as Oxford Gold Group. Most of these companies offer precious metal storage services and IRAs.
2. Excellent Price Performance
Gold is more a store of value rather than an investment. Precious metals don’t pay interest and dividends. However, having traded at a fixed price of USD$35 per ounce in 1971, gold is now valued at USD$1,300 or even higher. The value of gold increased dramatically by 37 times in the past 40 years, and this price performance is a good reason to add that particular metal to your portfolio.
Despite the rumors proliferated by detractors, gold and other precious metals still qualify as a good investment. In the 1970s, the average price of a house in the United States was USD$23,000, which was the equivalent of 674 ounces of gold. On the other hand, the average price of a house in 2017 was USD$248,800, equivalent to 191 ounces of gold. Hence, the value of gold increased faster than the price of a house since 1970, which provided investors of gold with excellent returns.
3. Hedge Against Inflation
One of the major investment risks you’ll encounter is the inability to beat inflation. If you’ve invested in assets that are unable to provide inflation-beating returns, you may not have enough money to use during your retirement years.
Among the best asset classes that can beat inflation are precious metals. Gold is always considered a great investment that can be used as a hedge against inflation. It means that this precious metal has long been able to provide investors with higher-than-inflation returns.
4. Good Store Of Value
Precious metals always have good value. Aside from gold, investing in platinum is a great decision.
Platinum is durable, malleable, dense, and ductile. This precious metal doesn’t lose its toughness even after pressing or hammering. Owning platinum is a unique investment opportunity, especially for novice investors.
The metal has been historically traded at a satisfactory premium to gold. It provides a low-risk entry for novice investors. A platinum allocation improves the returns of an investment portfolio, just like when gold and other precious metals are present.
Platinum is a well-performing, long-term precious metal investment. It’s suitable for investors who can appreciate the applications of platinum and can withstand short-term volatility. In addition, this precious metal has a good store of value and strong diversifying properties, so it’s worthy of being added to your portfolio.
5. More Options For Investment Diversification
Investing in gold doesn’t necessarily mean that you hold and store gold bars at home. There are many ways to invest in gold to diversify your investment, such as the following:
- Exchange Traded Fund (ETF): You can buy gold as an ETF. This means you can own gold without the hassle of physical ownership. With ETFs, a brokerage company purchases and stores gold on your behalf.
- Gold Mining Stocks: Another option is to invest in companies that produce or mine gold. You can benefit from the appreciating value of the company if it’s top-notch in mine discovery.
- Gold Mining Mutual Funds: You can own multiple gold mining firms through mutual funds, which minimize the risks of stocks. With a mutual fund, there are some associated fees, such as those for when you’re selling or buying investments as well as management fees.
- Gold Futures Contract Investments: This investment is complex, so it’s more suitable for seasoned investors. Gold futures are contracts that facilitate purchasing a set gold amount in the future at a particular price. When the gold price increases, the contract value is modified.
6. Tangible Ownership
Having physical gold, like coins and jewelry, is a form of tangible ownership. You’ll feel a sense of wealth fulfilment owning them. Of course, you can hand them down to your beneficiaries, and they would make a great legacy for the future generations of your family.
In times of financial difficulty, physical gold and other precious metals can be liquidated in order for you to get fast cash. Hence, many families keep physical precious metals to serve that very purpose.
Tips On Investing In Precious Metals
Now that you know the benefits of having precious metals in your investment portfolio, it’s time to learn how to invest in them successfully. Here are some helpful tips for you to try:
- Talk to your financial advisor to determine how much percentage you need to invest in precious metals for a safe margin.
- Assess the risks and benefits of investing in a particular type of precious metal.
- Look into the costs associated with investing in precious metals, such as storage and insurance.
- Choose the right bank or brokerage to work with when going for various investment options for precious metals, such as stocks, mutual funds, and ETFs.
- Research on various precious metal investment options that would be applicable to your risk profile.
Are you now ready to invest in precious metals? Doing so can help you counter the effects of economic crises on your other investments such as stocks. Because most precious metals hold increasing store value over time, they’ll provide you with excellent returns in the long term. Hence, they’re definitely worth adding to your investment portfolio.