If you're looking to start investing in gold, there are several questions to consider. Which precious metals investment company should you work with? Should you get a Gold IRA or purchase coins and bars that you can keep in your possession? How many ounces of gold should you own?
This last question is one of the most common questions individuals looking to invest in gold have. There isn't one cut and dry answer. Everyone's situation is unique, so you'll need to consider a variety of factors that can help you decide how many ounces of gold you'll want to add to your portfolio.
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Why Invest in Gold?
Before we take a look at how many ounces of gold you should add to your portfolio, let's start with a quick recap of why investing in gold is a good idea in the first place. Gold is a valuable precious metal that has been treasured for centuries. It has been used as the basis of currency by many different civilizations and continues to be seen as a good investment by many financial experts.
One of the benefits of investing in gold is that it can serve as a hedge against inflation. While inflation may make your dollars less powerful, gold prices aren't tied to the value of the dollar. In fact, as the value of a dollar decreases, it is likely that the value of gold will move in the opposite direction and increase.
Another huge advantage of investing in gold is that it can help add some diversity to your portfolio. Holding all of your assets in the stock market is risky. If the market crashes, think about how catastrophic it could be to your overall wealth. Investing some of your funds in gold works to balance your portfolio out. Now, if the market crashes, the overall impact won't be as catastrophic.
Demand for gold and precious metals is still high. With increased demand, basic economics explain that the price of gold will continue to rise. Beyond all the typical uses for gold, technological advancements continue to occur. Some of these advancements center around using gold for electronics, medicine, and more.
How Many Ounces of Gold Should I Own?
Rather than focusing on the number of ounces of gold to add to your portfolio, many financial experts recommend thinking in terms of percentages. Consider the value of your investment portfolio to start. Many experts recommend having gold and other precious metals make up at least 5% of your portfolio and up to 10% of your portfolio. To keep it simple, let's consider two different scenarios to see how this could play out.
Person A currently has 100,000 invested in the stock market. Based on the recommendations shared above, this individual should move between $5,000 and $10,000 to gold. Assuming gold costs about $2,000 per ounce, this person could purchase between 2 and 5 ounces.
If Person B has 500,000 in their portfolio, they should invest between $25,000 and $50,000 in gold or other precious metals. With gold costing approximately $2,000 per ounce, Person B could add 12 to 25 ounces of gold to their portfolio.
If you speak with some financial experts, you could hear a different answer. Some advisors recommend holding a higher percentage of gold in your portfolio, sometimes as much as 20 or 25%.
What Factors Can Impact How Much Gold You Should Own?
As you can see, there is no one right answer to how much gold you should own. In the end, you'll need to decide what is ultimately the best investment amount for you. If you have a personal financial advisor who has a better understanding of your specific portfolio and finances, they should be able to offer more tailored advice.
The ideal amount of gold to add to your portfolio can vary based on several factors, including your comfort with taking risks, your age, and your overall financial position and outlook. Let's take a look at how these different variables play a role in determining how much gold you should add to your portfolio.
Risk Comfort
Gold is sometimes classified as a riskier investment. However, it can also be a lucrative one, if you're willing to invest in it. Your comfort with taking a few investment risks—for a potentially large payoff—can help you determine which end of the recommended ranges you should fall in. For example, if you are more open to taking a few risks, consider investing 10% or more of your portfolio in gold. If you want to be a bit more cautious, perhaps staying closer to the lower end, or 5% of your portfolio, will be the better choice for you.
Age
It is also important to consider your current age and how close to retiring you are. Since gold is sometimes seen as a riskier investment, moving a larger percentage of your portfolio to gold may not be the best choice if you are getting closer to retiring. As with investing in stocks, it is better to take bigger risks when your money will have more time and opportunities to retire. Therefore, if you are still several decades away from retiring, you should have more room to take a few more risks with less detrimental impact. Investing 10% or more of your holdings into gold may be the right choice for you.
Financial Position
Finally, don't forget to consider your overall financial position and prospects. Do you feel comfortable investing your money in gold and leaving it there to grow? It will be best to leave the money that you invest in gold alone, rather than selling it in the short-term to cover an unexpected expense. Evaluate your resources and funds to make sure that you don't put yourself into too much of a tight spot before investing in gold.
Is There Any Limit on How Much Gold I Can Own?
Fortunately, the United States government does not limit how much gold its citizens can own. If you have the money to invest in gold and want to own a lot of it, there is nothing stopping you from purchasing as much as you want.
Should I Also Add Silver to My Portfolio?
Adding some silver to your portfolio is also often seen as a good financial decision. Like gold, silver can help you diversify your holdings and make sure that you are too dependent on any one type of asset. You don't have to choose between silver and gold, you can add some of each type of precious metal to your portfolio to help you get between the recommended 5% and 10% allocation (or more, if you've decided to take a bigger risk).
Many of the advantages shared above for gold also apply to silver. There are a few other benefits of investing in silver to consider. While gold has a few commercial and industrial applications, there are even more ways that have been discovered for using silver. This makes it even more appealing as an investment because the demand for it is likely to increase with these additional uses.
An ounce of silver is considerably less expensive than an ounce of gold. This makes it a more affordable investment for many individuals and can allow you to add more total ounces of precious metals to your portfolio. However, the balance is that silver is not as rare or hard to come by as gold, so the demand may not be as high overall.
One way to decide whether gold, silver, or some of both types of precious metals is right for you is to think about why you're investing. If you are investing to make sure you're prepared for a recession or depression, then you'll definitely want to hold some gold. As mentioned above, gold holds its value well and actually moves in the opposite direction of the value of the dollar. This can help make sure you're protected during times of economic uncertainty.
On the other hand, the value of silver is more closely related to the overall performance of the economy. As the economy grows and there is more demand for silver for commercial and technological uses, its value is more likely to increase.
Ways to Invest in Gold
Now that you're starting to understand how many ounces of gold you should hold and what percentage of your portfolio it should make up, the next step is to decide how you want to invest in gold. There are a few different options to consider: Gold ETFs, Gold Futures, purchasing physical gold, or opening a Gold IRA
Gold ETFs
Gold ETFs, or exchange-traded funds, are traded in the same way that stocks are. The investments in these funds are backed by physical gold. However, you will not hold any physical gold in your portfolio. While these allow you to get some exposure to precious metals, they aren't the ideal option if you want to really diversify your portfolio with physical gold coins and bars.
Gold Futures
Gold futures also do not allow you to hold physical coins and bars in your portfolio. Rather, they are a contract that gets traded, where the buyer agrees that they will purchase the precious metals in the future on a given date.
Purchasing Physical Gold
Purchasing physical gold coins and bars is one way that you can actually add real precious metals to your portfolio. When you own the physical coins and bars, you'll be able to actually hold them in your hands, helping you truly understand how valuable they are Physical gold coins and bars are also easy to liquidate, should you decide to sell them. This means that you'll be able to quickly cash out on your investment if you need money for an unexpected need.
Gold coins and bars come in different weights, making it possible to purchase even fractions of an ounce, depending on your financial situation. You can find bars and coins available from many different respected mints and manufacturers around the world, including the US Mint, the Royal Canadian Mint, and the Perth Mint.
Gold IRAs
Gold IRAs offer an alternative to taking possession of the gold coins and bars you purchase. Rather, you can add these assets to a retirement account known as a Gold IRA. Gold IRAs are one form of Self-Directed IRA that allow you to hold alternative assets in a retirement account. With a Gold IRA, you not only benefit from the numerous advantages of investing in gold that we shared above, but you also get to watch the value of your gold grow without having to worry about taxes. Like traditional IRAs, Gold IRAs are either pre-taxed or only taxed once you retire and start making withdrawals from the account. This can allow for some serious growth, helping better position you for your retirement years.
Goldco: The Top Gold Investment Company
Once you've decided that you're ready to start adding gold to your investment portfolio, you'll need to decide which gold investment company to work with. We know that there are several options out there, which can make it challenging to make a decision. Rather than getting lost searching through all the different companies, we'd recommend working with Goldco.
They have been in the precious metals industry since 2006 and are one of the most reputable and respected names in the business. You'll find that the team of precious metals experts that work at Goldco are not only experienced and knowledgeable, but that they're also extremely helpful and dedicated to the best interests of each customer. Goldco offers IRA rollover services and also allows customers to make direct purchases of gold and silver coins and bars.
The representative you work with will support you during the process of rolling over an existing retirement account and getting your new Gold IRA ready and set up. They'll be available to provide guidance in selecting the coins and bars you want to invest in, and then will make sure that everything is securely packaged and shipped to the Delaware Depository or Brink's Global Services.
One of the best reasons to work with Goldco right now is because of the incredible promotion that they are offering for new Gold IRA customers. You'll be eligible to receive as much as $10,000 in free silver (up to 10% back) when you open your IRA. This can help boost your financial aspects and offer greater diversification for your portfolio.
What do you think? Is Goldco the right company to help get you on your way to adding gold to your portfolio.
Don't forget to checkout our highest recommended precious metals investment companies if you want to move forward with an investment!