Choosing to buy and invest in gold can be an exciting venture to take on. For first-time buyers, it can turn into an overwhelming experience. There are many ways to invest in gold and lots of terms to learn before diving in. As with most investors, those who are new to buying gold will make some mistakes.
Below are the common mistakes that first-time gold buyers end up making.
1. Not Investing with Retirement Accounts
Gold is a long-term investment. Many gold buyers miss out on the opportunity to invest in precious metals using their current retirement accounts. Various employer-sponsored and individual retirement accounts can be used to invest in gold stocks. Each type of retirement account has its own limitations and flexibilities.
However, all accounts can allow you to gain a gold IRA rollover. Using this option will allow investors the ability to leverage the same tax benefits as traditional accounts and have full control over them.
2. Not Purchasing Gold Bullion
Gold bullion is considered an investment gold. It is the simplest way to invest in high-value gold because dealers can easily recognize it and value it. Bullions also get a number of tax benefits because of their classification for both CGT and VAT.
Unlike scrap gold and gold jewelry products, bullion is easy to resell because of its purity and no need to refine it.
3. Overpaying for Gold
One common mistake many first-time gold buyers make is paying too much for an ounce. It is best to check the market price per ounce of gold before buying from a dealer or private seller. Gold dealers charge extra to cover their operating costs.
Compare dealers before making a purchase to find one you trust working with and who offers fair, competitive prices.
4. Choosing Gold Dealers
First-timers like to go with what they are familiar with. It can be tempting to buy from sites like Amazon or eBay. Unfortunately, this can put your hard-earned money at risk. Correctly valuing gold takes knowledge and expertise.
Gold bars and coins come in various purities. Without understanding exactly what you are purchasing, you could end up buying gold that is worth significantly less than you originally thought. Stick to reputable gold retailers you trust.
5. Buying Non-Physical Gold
Another mistake that first-time gold buyers make is buying non-physical gold such as with ETFs or gold futures. This is a risky venture because you don’t have the actual gold to back up your investment. You will be at the agent’s or dealer’s mercy. In some cases, you may try to get your physical gold delivered and be told it doesn’t actually exist.
If you want less risk and a way to control your gold investments, physical gold bullion is the best option. You can store it, hold it, move it, and sell it as you please.
6. Not Realizing It Is A Long-Term Investment
The stock market is all about making quick decisions to buy or sell whenever there is the slightest dip or rise in prices. When it comes to gold, this is not the way it was intended to be traded. While buying and selling gold has the ability to make some quick profits for investors, it is best to wait it out.
Buying physical gold as an investment is a perfect way to protect your wealth when the markets get unstable. The primary benefit of gold bullions for many investors is diversification that will hedge against the various risks that can arise.
7. Buying Too Much
With all of the benefits that buying physical gold seems to offer, one mistake some people make is buying too much. While it’s a low-risk investment, it’s not invincible. Similar to investing in other precious metals and assets, gold has a time and place to buy it.
Gold is not the same as money. It’s a commodity and is not always the perfect hedge for economic deficits. You cannot pay your bills with gold. Your mortgage, utilities, groceries, credit card bills, and entertainment costs can only be paid with dollars.
To use your gold to pay off bills, you would have to first liquidate them. This may prove difficult in uncertain economic times, and you may not get the price you want.
The future of gold is always something investors are talking about. If you listen long enough to the critics, you may start believing gold is your solution to your financial troubles. Even during the best of economic times, buying gold should be done with caution. It’s not an investment to rush into without knowing what you’re getting yourself into. Buying and selling gold need to be done at certain times for the best results. Follow these tips to shorten your learning curve.