How much should you invest in gold?

A general rule of thumb is to limit gold to no more than 5% to 10% of your portfolio. Investors can invest in gold through exchange-traded funds (ETFs), buy shares in gold miners and partner companies, and purchase a physical product. These investors have as many reasons to invest in metal as there are methods to make those investments. There are many ways to invest in gold.

You can buy physical gold in the form of jewelry, bullion and coins; buy shares in a gold mining company or other gold-related investment; or buy something that derives its value from gold. Each method has its advantages and disadvantages. This can make it overwhelming for beginner investors to know the best way to expose themselves to this precious metal. Don't you want to dig a lot into individual gold companies? So buying an ETF could make a lot of sense.

Gold mining ETFs will give you exposure to the biggest gold miners in the market. Since these funds are diversified across the sector, you will not be greatly harmed by the poor performance of any miner. If you are the type of investor who is relatively confident in the country's economic growth but wants to have some kind of insurance against incidentals that cause a recession, then you can allocate between 5 and 10% of your portfolio to investments in gold and gold-related securities. If you decide to invest in gold with bullion, it is also a good idea to keep up to date on the price of gold, so you can choose the right time to buy, most dealers update their prices based on current spot prices.

If you fall into this category of investors and consider that investing in today's economy has a moderate to high risk, you may want to allocate a slightly larger share of your portfolio to gold and gold-related securities. Just keep in mind that financial advisors generally don't recommend investing more than about 10% of your total assets in gold. Investing in physical gold can be a challenge for investors more accustomed to trading stocks and bonds online. If you think gold could be a safe bet against inflation, investing in coins, bars or jewelry are paths you can take to gold-based prosperity.

Most investment experts recommend dividing their investments among several asset classes, such as stocks, bonds, gold, real estate, etc. Throughout history, few investments have rivaled gold in popularity as a hedge against almost any kind of problem, from inflation to economic turmoil or currency fluctuations, to war. When most people think of investing in gold, bullion is what they think of big, shiny gold bars locked in a vault. Investing in gold isn't for everyone, and some investors just bet on cash-flowing businesses instead of relying on someone else to pay more for the shiny metal.

Gold mutual funds, such as the Franklin Templeton Gold and Precious Metals Fund, are actively managed by professional investors. More and more investors are concerned about the social and environmental impact of their investments, and gold mining can leave a significant toll on the environment and raise human rights and governance concerns, as gold mines are located in conflict-affected or high-risk areas. The biggest advantage of using futures to invest in gold is the immense amount of leverage you can use. The investment information provided in this table is for general informational and educational purposes only and should not be construed as financial or investment advice.

Investment decisions should be based on an assessment of your own personal financial situation, needs, risk tolerance and investment objectives. While this may help during market downturns, it's important to make sure you reallocate your gold investments each year and eliminate profits from the table. .

Angelia Panyko
Angelia Panyko

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