Have you ever thought about investing? If you are here reading this, there is a fairly good chance that you have. It is not like it is some huge secret that is being kept from us, after all – there are tons of places that encourage us to start preparing for our futures by investing, investing, investing.
What is the deal with it, though? How does it work in practice, for most average Americans? Admittedly, it is a bit different than what we see on the news, on television, or in movies. Often, we are shown glamorous versions where a ton of people are able to miraculously become millionaires overnight.
Obviously, in reality, this is not quite the case. There are plenty of articles out there like this one that demonstrates that for most of us, it will be a bit of an uphill battle. Do not let that dissuade you, though. There are a ton of resources that can help you get started, some of which we will be covering here today.
Naturally, our main focus is going to be on gold investing – well, really, in the market of precious metals in general. There is a whole lot to cover there after all. With that said, let us first cover some of the basics – that way, when we do get to precious metals, you will be familiar with all of the background information as well.
Investing: What You Should Know
Just to ensure that we are all on the same page here, let us examine what investing is in the first place. As you may already know, it is a way that we use our current money to hopefully generate more income in the future. This can be accomplished in a few different ways, though, so keep that in mind.
This concept is also known as “appreciation,” which of course means generating income in this context rather than the other meaning of the word. You can also “invest” in anything since there are a lot of different resources that we can use to do so. Basically, any time that you are using some form of resource with the aim of long-term gains, it counts.
So – what might you invest in, then? One example is time. Putting a lot of time into a specific task or goal can fall under this umbrella, although it is perhaps a bit more of an abstract method. Typically, it is going to be money that we are putting up front.
Then, ideally, we are able to make a profit when we decide to cash in on the investment down the line. As far as the must-know bits are concerned, that is all, so let us shift focus a bit now.
Terminology You Should Know
Before we go any further, let us get this out of the way: economics and finances are complicated. There are a million and one terms for the various concepts involved. It can get really confusing if you do not know how to navigate it, and if you are looking to invest in precious metals, it can be especially tough when you are just getting started.
Capital
We will start with what is perhaps the broadest term here today. Really, we can attribute it to pretty much anything that holds benefits or value for the holder. So, that could be bullion, stocks, bonds, or even intellectual property. Here are some other common examples to give some context: bank accounts, private loans, businesses or organizations, and corporations.
Commodities
This is a type of asset class that is based on raw goods or materials. They are considered commodities if they end up undergoing any other sort of processing down the line before they get sold. So, as you can probably imagine, it is a pretty broad category.
Incidentally, precious metals fall under this particular umbrella, but there are also crops such as wheat and tobacco and most types of fuel. Although this might not seem overly relevant, keep it in mind since this is where gold, silver, platinum, and palladium all fall.
Diversification
In the context of investing, this specifically refers to making a wide variety of investments for your portfolio. That means that you will need to get several types of assets to buy into. Think of it as a way to ensure that you are not putting all of your metaphorical eggs into one basket, right? Learn more about the concept in this article.
Risk Management
Finally, let us talk about one of the most difficult parts of this process – managing our risks. Specifically, this is in reference to how risky an asset is considered to be. Stocks for companies that tend to fluctuate in profit margins are considered high risk, while something like gold is considered low risk.
Precious Metals and Investing
Now, let us get to the real meat and potatoes of our discussion today. Precious metals are a category in the periodic table, and they are situated there for a few reasons: they are rare, they are highly conductive, and they are not reactive. The most common examples of them are of course silver, gold, palladium, and platinum.
Read more about the chemistry of them here, https://pubs.rsc.org/en/content/articlehtml/1999/an/a904839a, if you are curious. Of course, that is not really necessary for examining the investment side of things, so let us move on.
Gold bullion is the most popular way to invest in precious metals. That is because it is relatively affordable, can be stored in all sorts of places, and is accessible to a lot more people than something like platinum or palladium. Why has it been such an appealing type of asset for so long, though?
There are a few ways to answer that, of course. For one thing, the rarity of gold makes it inherently appealing to a lot of us. Beyond just that, it can be used to create all types of things, from coinage to jewelry to components in electronics. The possibilities are pretty much endless there, and that means that the value is not going down any time soon.
For investors, this makes bullion a low-risk type of asset. The fact that it is not impacted by inflation nearly as much as paper currency is simply the icing on the cake, really. If you are not familiar with that concept, it is known as a “hedge.”
How to Invest in Bullion
With all of this said, you are probably still wondering how you would be able to invest in bullion in the first place. Well, there are of course a few different methods. Primarily, though, you would be working with an investment company of some sort that specializes in precious metals.
These are known as brokers, and you can find a full review of most of those companies online if you go looking for them. Try to find ones from industry professionals, since they often have the full scoop on which ones are worth working with and which you should avoid. It is a pretty big deal to find a reputable source to buy your gold from, after all.
Bullion is not the only option either, of course. If you prefer, you could go for a type of collectible like coins. Some of those can even be deposited into individual retirement arrangements that are tailored to precious metals, although they do have to fulfill the minimum gold percentage requirement if so.
Folks tend to go for bullion because it is less complicated and requires a lot less know-how as far as world currencies go. Instead, it is about finding a good vendor and being able to discuss options with them. It is your capital that you are sinking in, after all, so it makes sense to want to get only the best involved along the way.
Is it Worth it, though?
Finally, let us take a moment to ask ourselves this incredibly important query: is it worth it to invest in gold bullion? Considering all of the factors at play, we will spoil the answer for you now: yes, it is. There is some nuance here though, so allow us to explain.
Primarily, gold, and other precious metals can be thought of as a way to store wealth in an alternative method to paper currency, stocks, bonds, or any other types of assets that can be impacted by inflation rates. Over the years, currency loses spending power – that is just how it is. Gold, though, never really loses its value.
Seeing as there is always going to be a higher demand for it than there is supply, you are not going to be losing money on it. At the same time, you may not necessarily gain anything huge from it either. There is a chance that you will, obviously, but that can require some careful planning and wait until the perfect moment.
These days, most gold investors are doing it to help themselves prepare for their retirement. It is scary to have a ton of assets that could just be depleted almost in an instant because of the fact that inflation rates rise. So, to protect themselves, they turn instead to a commodity like gold.
So, if that sounds appealing to you, there is a fairly good chance that you will find investing in bullion worth it. Do the necessary research before you buy, though, and make sure to read plenty of reviews of the company that you are considering purchasing from. Because of how many there are online, it can be kind of hard to choose one otherwise.
At the end of the day, you are the one in charge of your personal finances. There is always a chance that an asset will not suit your particular investment style. You will never know the answer to that if you do not try, though, so it is always worth at least giving it a shot before you write it off.
