Wednesday, January 29, 2014, PM | Leave Comment
Everyone must be telling you about how gold is the perfect investment. While it is true that gold has far many uses other than just buying gold eternity wedding bands New York, there are quite a few considerations that you have to make while deciding to invest in gold.
Gold pays you about 8 to 10 % on the investment annually. However there are quite a few other investments that can give you the same returns without the inconvenience that gold entails.
So, before jumping on to the idea that gold is a safe haven for potential investors, consider these factors and then make an informed choice.
Gold investment is long-term
This is the kind of investment where you will have to sit back and bide your time. The best time to make an investment in gold is when the prices are really low, and then wait for the next inflation scare for the prices to rush up.
Remember that you will only make a good return on it if you buy the gold at a time when the prices are extremely low and then wait for a long time.
Gold coins are troublesome
While having gold coins is a nice and solid way of knowing that you have investment, they are also a big trouble to carry around. Gold coins are shiny and jingly, but they are also inconvenient, not to mention risky. Thus if you are actually planning to invest in gold, then it’s a better idea to own gold mining stocks.
That way, you can just make a call and sell them, instead of having to carry the coins around. Also, gold mining stocks are usually better insulated against inflation as opposed to gold coins. Thus add bonds to your stock portfolio, not coins.
Why should you buy gold stocks?
Firstly, physical gold investments don’t yield any dividends. You just hoard them and then sell them when the price is right. Gold mining stocks have dividends when they are profitable.
Secondly, as mentioned before, gold stocks prices rise as the physical prices go higher and higher. This means that the higher the price, the greater the profit from the shares.
The arguments for physical gold investments
One advantage of buying physical gold is that it is not subject to market risks like stock investing is. Thus it is immune from depression, wars, and other calamities. Gold mining stocks on the other hand, are.
Physical gold can be used as barter during moments of crisis. You can’t do the same things with gold mining stocks with the same amount of ease.
Always compare the percentage, not the prices
Whenever you are planning to buy gold, always compare the different forms, not in terms of their prices but their percentage over the gold price. This is called the percentage premium. The actual prices are constantly moving up and down along with the base gold price. So, always take a look at the percentage prices.
Remember that this investment in gold is not just buying eternity wedding bands New York. This is about making a serious financial investment. Whether or not you invest in gold depends on what you are looking to get out of this.
For those who want savings, buying physical gold is a better idea. Those who want a big payout at the end, should go for the gold mining stocks. A lot of experts recommend investing half of the available money in stocks and the other half in physical gold.
About the author
Mike Tyler is a chartered accountant working with an international financial corporation. He also works as a financial consultant for a company specialising in eternity wedding bands New York. Mike loves volunteering at his local community centres on weekends.