Gold can be a fascinating asset for investors thinking outside the box. There’s more to the investment world than stocks and bonds, and bullion provides a useful alternative that can complete your investment strategy and help your portfolio grow in all circumstances.
But bullion comes with its own principles and qualities. If you’ve never invested in it before, these steps will help you integrate gold into your investment strategy.
1. Decide How Much You Want to Invest
The first step is to decide how much you want to invest in gold. Financial experts suggest you should try to invest 10 to 20% of your after-tax income, although that should be spread out between various assets.
Over-committing to any single asset can be a significant risk in its own right. Gold helps you diversify your portfolio.
Roughly 5 to 10% of your portfolio can safely be put into bullion. That gives you enough exposure to take advantage of the qualities of bullion.
2. Create Your Broader Investment Strategy
Every asset you invest in has a role to play in your portfolio and in achieving your bigger financial goals. Bullion’s role is a defensive one. In the past, bullion prices have done well during recessions, uncertain economic growth, and stock market volatility. It’s what you want to own when stock prices are chaotic, and recession fears are growing.
3. Find the Right Bullion Dealer
Once you have a strategy for investing in gold mapped out, the next step is actually buying some. Physical gold bullion gives you direct control and immediate access to your investment, a valuable quality for some investors.
Local bullion dealers are a great option for finding the most common gold coins and bars with the lowest premiums. Bullion dealers sell both gold and silver in the form of coins from national mints and bars made by private refiners.
4. Find Your Storage Solution
Unlike paper assets, physical gold requires a physical storage solution. You may want to consider a home safe if you prefer to keep your bullion close at hand, but you can also use a safety deposit box at a bank or bullion storage.
5. Decide on an Exit
The unpredictability of the market for any asset will always be a challenge for investors. One strategy that can help is making a clear plan for your exit. Ask yourself these questions:
- Do you plan on selling your bullion, or are you investing in it to pass wealth onto your beneficiaries?
- If you want to sell, what do you want to do with the proceeds? Is there another investment opportunity you want to take advantage of, or will the proceeds fund your retirement or a major purchase?
- If you want to pass the wealth along to your loved ones, how do you need to prepare your will and estate to make sure your gold is passed down properly? Make sure you understand local inheritance taxes and take the necessary steps, such as setting up a trust, to make the process seamless for your beneficiaries.
With a strong exit plan, you don’t need to leave circumstances up to chance.