This post is sponsored by Entertainment One. All views and opinions expressed represent my own.
Have you ever thought about investing in gold before? I’ll be honest, I never have. Index funds? That’s how I started my investing journey. Mutual funds? Been there, done that. ETFs? My new favourite thing. Gold? Well…does my wedding ring count? Because that’s pretty much the only gold I’ve ever invested in.
So, when I was asked to chat about gold investing for a video to promote Yukon Gold (my new binge-worthy guilty pleasure), I started digging deep (no pun intended) to learn more about the pros and cons of investing in gold.
And here’s what I found out that I think you’d also like to know before you start trading in your cash for gold bullion or buying some land up north to start mining for the precious metal yourself.
You Don’t Have to Own Physical Gold to Invest in Gold
Gold doesn’t just mean gold bars and coins anymore. You can invest in gold without actually owning the precious metal these days. Which is a good thing because keeping that gold safe and secure is pretty costly.
Instead, you can choose to invest in gold ETFs (exchange-traded funds), gold ETNs (exchange-traded notes), gold-mining stocks and gold mutual funds. And if you’re now wondering how to get your hands on these gold ETFs or stocks, it’s similar to investing in other ETFs and stocks — you need to go through a broker.
It’s Quite Costly to Own Physical Gold, Actually
As I mentioned earlier, if you want to go old-school and own physical gold, it can cost you.
If you’re thinking you can just buy a few gold bars, keep them under your bed and hope no one breaks into your house and robs you, that’s a terrible plan. And as much as I understand the desire to hold onto some gold in case we need to rebuild the economy after a zombie apocalypse, there are some better options out there.
First, you can keep your money in a safety deposit box, costing you around $100/year. Second, you can keep it safe in the bank’s vault, costing you about 1.5% of the gold’s value per year. That also doesn’t include insurance or the cost of actually selling the gold for cash down the road, so just be aware of these extra expenses.
Gold Should Be Looked at as a Way to Diversify Your Portfolio
Similar to other investments, you shouldn’t put all your eggs in one basket. Even if that egg is golden. Gold should be something you invest in to diversify your portfolio, not something you dump all your money into. You see, the price of gold tends to go up when the markets go down, especially during a market crash. So if you’re carrying some gold in your portfolio, even though your other stocks might be dropping at a considerable rate, your gold stocks will do the reverse.
On the other side of the coin, gold prices dip when inflation is low and the economy is generally doing well. But if you’ve got a diversified portfolio, things should balance out in either scenario.
Do Your Research!
Just like any other investment, gold has some risk attached to it. Which is why you should always be a well-informed investor and know what you’re getting yourself into before investing in gold or anything else for that matter. That’s why if you are seriously considering adding gold into your investment portfolio, you should check out some of these resources to further your education:
- Gold ETFs Allow You to Invest Without Investing in Gold – The Balance
- How to Buy Gold Stocks – TSI Wealth Daily Advice
- The fears, facts and flaws of buying gold – The Globe and Mail
- 8 Things to Know Before Investing in Gold – Bankrate
- 5 Facts to Consider Before Buying or Selling Gold – Forbes
Have You Thought About Investing in Gold Before?
Is gold part of your overall portfolio? Or is it something you’ve thought about before? Let me know in the comments! Would love to know your thoughts and experiences.