There are many possibilities to consider with gold investments. One option is to directly buy physical gold. Another possibility is to go with a mutual fund, which is still backed by actual gold. There’s no one “best” answer when it comes to what you should invest in or buy. That said, there are some pros and cons associated with gold and mutual funds to consider as you determine what’s right for your situation. The precious metals experts from First National Bullion, the best place to buy gold in Carlsbad, offer the following tips as you weigh your options.
Gold
Gold in solid form has been appealing to buyers from all walks of life for centuries. It’s still a smart investment due to the many options available with physical purchases. Investors typically prefer either gold bars or gold coins issued by a sovereign government, such as ones manufactured by the U.S. Mint. With physical gold, you’re doing the buying, selling, and investing yourself based on what appeals to you and what fits into your budget.
Pros
• Fairly consistent value, especially during economic downturns
• Considered a very low-risk asset, since physical gold always has a discernible value
• It’s largely considered a safe investment and a hedge against inflation
• You actually have the gold in your possession
Cons
• You need to find a safe, convenient place to store your gold
• Physical gold, even in smaller amounts, can be pricey if you have a limited budget
• You may face possible liquidity issues, since you need to find a buyer willing to purchase what you have at a fair price
• You get no yield when you own it unless you sell it
Mutual Funds
With mutual funds, you’re either directly or indirectly investing in gold reserves electronically. A professional portfolio manager manages gold-backed mutual funds for you. This is the person who buys and sells on your behalf for a professional management fee. Considered an open-ended investment, the underlying asset here is still physical gold. Therefore, the performance of the investment isn’t directly related to what’s going on with company stocks.
Pros
• A lower risk, since it’s not tied to company stocks
• A highly liquid and convenient investment
• No need to store physical gold
• Reduced portfolio risk, since your gold investments can be spread out among multiple sources
Cons
• Higher expense ratios
• Management fees
• Uncontrollable tax events due to higher turnover with gains and losses
• Possible trading delays, since mutual funds are only traded once per day
Determining What’s Right for You
If you’re a new gold investor or buyer, it can be a bit overwhelming as you get a feel for your available options. Both gold and mutual funds have many appealing investor-friendly perks and some notable drawbacks. Fortunately, it doesn’t have to be one or the other. You can always buy some physical gold and mix things up with mutual funds or even gold stocks or exchange-traded funds (ETFs). While every situation is different, as you explore your options with buying and investing that involves gold, it can be helpful to consider:
• Your short-term and long-term investment goals
• Your available budget
• Whether you prefer a direct or third-party approach to handling your investments
• Whether you want to hold on to what you buy for financial security or earn a potential profit through buying and selling
If you decide to purchase physical gold, make sure to work with experienced, trustworthy professionals. Whether they’re looking to buy gold bars, platinum coins, or silver bullion, Carlsbad residents can trust the reputable dealers at First National Bullion. We’re a boutique precious metals firm with highly experienced professionals. If you’re looking to add precious metals to your collection, call us today at 760-253-8072.
The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.