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How To Invest In Gold: Investment Ideas For Beginners

Investing in gold is a smart way to diversify your portfolio and potentially build wealth over the long-term. Gold is one of the most stable investments around, and because it doesn’t rely on any other factors, such as economic conditions or currency values, it typically has a low correlation with riskier assets. Gold also holds its value well and can be sold or exchanged for paper currency at any point. Here are some investment ideas for beginners who want to start investing in gold and/or those who already own gold but want to learn more about how to invest in gold.



Understanding Gold's Role in Your Portfolio

Gold is one of the most popular investments for beginners because it's a stable asset that doesn't fluctuate in value. Gold isn't as volatile as other investment options, either. It also has a high total return, which means you'll get your money back more than 80 percent of the time.

Gold is incredibly versatile. Buy gold to fix your car or buy gold to fix your computer system. You can even add gold to your retirement portfolio and use it for inflation protection purposes.



Investing in Gold for Beginners

Those who are new to investing in gold can consider the following funds from BlackRock: WisdomTree Gold Fund and iShares Gold Trust ETF (NYSEARCA:IAU).

Both of these funds target their asset allocation at approximately 60 percent gold, 30 percent silver and 10 percent other assets. These funds have low expenses as well, with a 0.11 percent expense ratio for WisdomTree Gold Fund and 0.15 percent expense ratio for iShares Gold Trust ETF on a net asset value basis.

In general, these two funds will invest in companies that offer high-quality gold or silver miners like Barrick (NYSE:BRK-A), Newmont Mining (NYSE:NEM) and Anglo American (NYSE:AA). However, both funds also have holdings in some exploration companies like Glencore (LSE:GLEN) that happen to be leaders in gold mining technology.

The Golden Rules of Investing in Gold

1. Invest in high-growth gold companies

Gold has a high correlation with fast-growing industries. Investing in companies that are growing quickly and are in the early stages of their business development is a great way to grow your investment portfolio over time. Although gold prices tend to be volatile, they tend to move up and down more slowly than other asset classes. This makes them an excellent long-term investment if you stay on top of their growth.

2. Be selective when it comes to your investments

There's no point investing in gold if there's nothing you really want from it. It's important to take time to find out what you want from gold before you invest in any particular company or product. Gold, like any good asset, should be chosen for its intrinsic value as opposed to its appreciation potential or the interest rate it may pay you at retirement.

How to Buy Gold?

First, you need to decide what kind of gold you want to invest in.

There are two main types of gold:

Physical Gold - This is the type that's produced by mining and means that it's based on real ore mined over years or decades, not just one mine. It's also a physical asset – it can't be manipulated or secretly traded.

- This is the type that's produced by mining and means that it's based on real ore mined over years or decades, not just one mine. It's also a physical asset – it can't be manipulated or secretly traded. Precious Metal Coins - These coins have no value because they're not backed by any actual commodity; instead, each one represents the value of a specific amount of another precious metal (such as silver for gold).

If you think about it like this: If you buy physical gold, there’s no risk involved in buying something with intrinsic value other than how much money you're willing to pay for it (it’s basically how much you’re willing to pay for air because air doesn’t cost anything).

You can buy gold online or at your local coin shop. You'll often see "coins"


Tax Implications of Buying and Selling Gold

Tax implications of buying and selling gold are complex. For example, gold stored in a bank or other financial institution may be considered personally held property, while gold stored at a safe deposit box or similar secure location is not.

If you own gold and sell it, you'll need to report the sale on your tax returns. The Internal Revenue Service (IRS) will determine if you're a "seller" for federal income tax purposes. If so, the IRS will treat the sale as a capital gain, which means you'll have to pay taxes on it. If not, then you won't owe any taxes on the gold sale and you can keep the money in your brokerage account without paying any taxes.

The same rules apply if you buy gold for personal use and want to make cash payments using paper currency instead of buying gold coins in order to avoid paying capital gains taxes. The IRS usually treats cash payments made with paper currency as sales rather than as purchases of precious metals such as gold since it's considered personal consumption by most people who purchase cash bills with their own money at banks or other financial institutions.

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