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Adding gold to your portfolio can be a smart move in nearly any type of economy. After all, investing in the gold metal comes with unique benefits, like portfolio diversification and inflation hedging, which can be invaluable to the right type of investor. So adding it to your portfolio can make a lot of sense in most cases.
But today’s unusual economic climate has had a big impact on the gold investing landscape and has caused gold’s value to surge from just above $2,100 per ounce in late March to where it sits today — at just above the $2,300 mark. This uptick in gold prices has attracted a new wave of investors who are eager to capitalize on the precious metal’s upward trajectory.
However, for investors who are operating on a tight budget, the prospect of investing in gold can seem daunting. After all, a single 1-ounce gold bar or coin can easily cost upward of $2,300 right now, a sum that may be prohibitively expensive for many aspiring gold investors. Fortunately, there are several alternatives that allow those with smaller budgets to gain exposure to the precious metal without breaking the bank.
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6 gold investing options to consider on a tight budget
If you want to invest in gold but are on a limited budget, here are some of the top gold investing options to consider:
Fractional gold
One of the most accessible ways for budget-conscious investors to gain direct exposure to gold is through fractional ownership. With fractional gold, investors can purchase and own a specific fraction or weight of a physical gold bar or coin.
Many online platforms and precious metal dealers now offer fractional gold ownership, allowing investors to purchase as little as a few grams or less of physical gold. This makes it possible to invest in gold with a relatively small initial investment, sometimes as low as $50 or less.
The fractional gold you purchase is typically stored in secure vaults by the provider, and investors can choose to take physical delivery of their holdings or sell them back to the platform at the prevailing market price. This also makes it simple to buy, sell and store the fractional gold you purchase, which can be an added benefit for many types of investors.
While these services can provide a convenient way to invest in gold, though, it’s essential to thoroughly research the fractional gold provider’s reputation, fees and security measures before committing any funds.
Add gold to your portfolio today to take advantage of its unique benefits.
Gold mining stocks and ETFs
Investing directly in the companies responsible for extracting gold from the earth is an excellent way to gain indirect exposure to the commodity itself at an affordable price. After all, gold mining stocks tend to track the price of gold, offering investors an opportunity to benefit from rising gold prices without having to purchase physical bullion.
But gold stocks aren’t the only option. Gold exchange-traded funds (ETFs) that hold baskets of gold mining stocks can also provide diversification benefits while still capturing the upside potential of gold. These funds are often more affordable than buying individual stocks and can be easily traded on major stock exchanges, so they’re a solid option to consider if you’re trying to invest in gold on a tight budget.
Gold mutual funds
Similar to gold mining ETFs, gold mutual funds focused on gold and precious metals offer a diversified approach to gold investing. These funds typically hold a mix of gold mining stocks, physical gold bullion and other gold-related assets.
One big advantage of gold mutual funds is that they are actively managed by professional investors who can adjust the portfolio’s holdings based on market conditions. However, it’s important to note that these funds typically carry higher management fees than gold ETFs, which can potentially eat into your returns over the long run.
Gold jewelry and coins
For those with a more modest budget, purchasing gold jewelry or coins can be an accessible way to gain direct exposure to the precious metal. While these items may not be as liquid as gold bullion bars or ETFs, they can still serve as a store of value and hedge against inflation.
When shopping for gold jewelry or coins, it’s crucial to understand the premiums charged by gold dealers and jewelers. These premiums can vary significantly and can also drastically impact the overall cost of your investment. It’s also important to consider the purity of the gold, as the lower-purity items will contain a smaller percentage of actual gold.
Gold savings accounts
Some banks and financial institutions offer specialized gold savings accounts, which allow customers to hold a portion of their savings in physical gold. These accounts function similarly to traditional savings accounts, but the value of the account is tied to the prevailing gold price.
Gold savings accounts can be a suitable option for those seeking a low-risk way to gain exposure to gold while still maintaining liquidity — and if you’re on a limited budget, this can be one of the more affordable options to consider in terms of gold investing. However, it’s important to carefully review the account’s terms and conditions, as fees and restrictions may apply.
The bottom line
As with any investment, it’s crucial to conduct thorough research, understand the risks involved and diversify your portfolio to minimize potential losses related to gold investing. After all, gold, while often touted as a safe-haven asset, is still subject to market fluctuations and should be approached carefully.
For those with limited budgets, the options outlined above can provide a gateway to the world of gold investing. By carefully evaluating the costs, risks and potential returns associated with each option, you can make informed decisions that align with your financial goals and risk tolerance.
