Investing For Beginners – Free Investment Articles and Tutorials

The value of equities may rise or fall, or even crash to zero. But gold will always command some value. This is because the demand for gold is much more than its supply. According to estimates, the world buys 4,000 to 5,000 metric tons of gold every year. This is almost double of gold production which is around 2,500 tons a year. That is why investing in gold is like buying insurance.


The second reason to invest in gold is to bring diversity to a portfolio. An investor needs to spread his bets. In doing so, he needs to buy assets whose value will not dip in times of economic uncertainty. This is where gold proves very useful. It works both as a commodity and as an asset, and reduces the risk factor in any portfolio.

The third big advantage of any investment in gold is that it offers easy liquidity, and works like insurance. An investor can sell gold in times of crises; the payment is instant.

The most common ways to invest in gold are:

• Gold coins: These are the safest because they are issued by governments; their gold content is assured; they are accepted across the world; and they can be stored or carried easily.
• Bullion bars: The gold bars or bullion bars are also a safe investment provided they have been bought from well-known gold trading companies. However, carrying them is a problem.
• Gold mining shares: This investment is for those individuals who want to make money from gold. They can buy shares floated by gold mining companies, and earn high returns. However, such investments are prone to the same danger that other equity investments face.
• Mutual funds: Individuals can also invest in mutual funds that trade in gold shares. By doing so, they minimize their risks slightly.
• Gold options: This investment allows an individual to buy or sell gold at a fixed price on some future date.

The ideal investment in gold should range from 5% to 10% of an individual’s portfolio. Also, of this the higher part should be in physical gold.

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