Investing in Gold

You ask any investment consultant today, and they will vouch that gold is a must have in one's investment portfolio. There are many reasons for this - firstly, gold has proved its resilience in the current economic recession scenario by remaining unaffected by it. Secondly, inflation or a fall in the currency value too, do not affect the gold value much. Also, investing in gold is pretty much easy i.e. buy when the gold prices are down and sell when they are at their peak. Let us know a bit more about them.

Why Invest in Gold

Most people are averse to taking risk. So, whenever they think of investing, the first option they go after is the fixed deposits in banks. If you invest a certain amount of money in these fixed deposits, you will earn some profits on it by way of the interest which the banks offer. However, if you look at the kind of interests which most banks offer today, it is much lesser than what it was in the past. This makes the return on your investment minimal too.

Other popular option for investments is the stock market. People who are ready to take some risks in lieu of greater returns on their investments, usually go in for this option. However, the economic recession and the resultant market meltdown, has made many such investors suffer innumerable losses. Thus, investing in stock market, especially if one does not have a complete knowledge of its working, is an extremely risky proposition.

This leads us to our third option i.e. investing in gold. Buying gold as an investment is like a middle way between putting your money in banks and investing it in the stock market. The reason why investing in gold is the best option - returns are higher if you compare it to the fixed deposits and the risks are lesser when compared to the share market.

How to Invest in Gold

Gold Stocks
These days you do not need to physically keep the gold with you, in order to invest in it. Gold can be bought in the form of ETFs i.e. Exchange Trade Funds. Like shares, ETFs are traded in the stock market. For investing in gold stocks, you simply buy the number of shares equivalent to the weight of the gold that you own. The ETF company will hold the gold for you and charge some fee in return. One drawback is - they are subjected to very high capital gains tax.

Gold Bullion
Gold coins and gold bars, together, are referred to as gold bullion. If you are contemplating investing in coins and gold bars, make sure that you buy them only from places of repute. The best way to invest in coins is to buy the recently minted ones from government mints, financial institutions, banks or from a reputed gold store or jeweler. The price of the bullion gold bars depends upon its weight. By buying from a reputed place, you are making sure that they are pure and not stuffed with any fillers, just to increase their weight! You can expect some really good returns from this investment, if you are careful while buying them. Their only drawback is that you need to keep the gold coins and bars really safe at all times!

Government Backed Gold Certificates
Buy gold certificates. However, make sure you go in for a gold certificate which is backed by the government to prevent yourself from getting duped.

Though investing in gold is profitable, it makes sense if you keep a tab on the past, current and future gold prices trends before taking any decision. Some financial experts are of the view that your gold investment should be around five percent of the entire investment portfolio and not more than that. So, keep these things in mind and exercise caution before you set out to invest in gold! Good luck!