This post may contains affiliate links, which means I receive a small commission at no cost to you. Please read the full disclosure here.
When the stock markets go down, the first thing people do is panic.
Especially when they aren’t a savvy investor (which is most of the general population).
One of the best key to successful financial money management is diversification.
However, for the average person, investing is just too difficult of a concept to overcome and the thought of losing their money is a gut punch. So, instead of taking action and learning, they are more likely not to do anything and miss out on making money on their money.
Better idea would be to pick one of the best investing books to get some basic knowledge.
It is possible to be the average income earner and start investing in precious metals. (And thankfully after my OneGold review, I learned the barriers of entry are minimal).
How to Invest in Precious Metals
The traditional approach to investing in precious metals is to buy gold, silver, and/or platinum.
There are two “traditional” ways to invest in these types of precious metals.
The first investment method is to buy the physical gold and silver and then store it privately or pay someone to store it for you. These method of investment is cumbersome for the average worker, and thus, considered to be an investment alternative only for the rich. This is one of the primary uses for safety deposit boxes.
A more accessible investment method is to buy a precious metal ETF or mutual fund. With this type of investment, you are buying into a stock at a set price. Typically, the ETF or mutual fund is made of up of various precious metal positions. When you sell the ETF or mutual fund, you get the gain or loss based on your personal cost basis (the amount you bought it for). Typically, ETFs or mutual funds are less volatile as they spread risk across more points.
Until recently, those were they two primary ways to invest in precious metals.
However, OneGold has changed the landscape of investing in gold, silver, and platinum.
Now, it is easier than every for the average investor to invest in precious metals with digital precious metal investing.
Benefits of Investing in Precious Metals
Unlike investing in the stock market which doesn’t have something tangible you can hold on to and comes with a great deal of daily volatility, with precious metals you can actually touch and feel your gold, silver, or platinum.
The biggest advantage of precious metals is it is a physical commodity. You actually own a piece of precious metal.
Stock investments or cash only exists on paper as such their values can fluctuate greatly depending on market conditions and government stability.
The next benefit of investing in precious metals is they are a limited commodity.
That means only so many precious metal exist in our world. That means the price of these precious metals – gold, silver, and platinum – will continue to grow because demand won’t go away. These precious metals are still being mined, but not at a rate fast enough to keep up with the demand.
What are the Risks of Investing in Precious Metals?
Just like an investment, there is always a chance that you will lose money.
That is the risk of investing your money.
However, it must be noted, that note investing in your money and leaving it in cash is risky too. Your dollar today will not have the same purchasing power in one year (source). In fact, your money is worth less each day.
The primary risk of precious metals is they can quickly lose value especially with economic uncertainty. Just as they have massive increases in value. The price is determined by the supply and demand of the product. That is something that will constantly fluctuate and comes with risk.
One of the difficulties for the average investor with precious metals is getting a true buy and sell price. Too many times there are hidden fees and costs that you weren’t anticipating.
You have to wary of scams (just like you do with any type of investing). If the deal seems too good to be true, then it probably is. Do you due diligence and make smart investment decisions.
How to overcome risks of investing in precious metals?
Just like with any investment it is best to diversify. This is one of the keys to successful financial money management.
Don’t put all of your eggs in one basket.
Are Precious Metals still a Good Investment?
Yes, remember diversification is key. That is the golden ticket to successful investing.
So, let’s breakdown this concept of diversification.
You have heard of the saying, “Don’t put all of your eggs in one basket.” Same goes for investing.
It isn’t wise to put all of your money in just straight plain cash. Same with investing everything into high risk mutual funds. Or just bonds. Or precious metals.
During the ’90s until 2005, the prices for gold pretty much flatlined (source). During that same period, the Dow Jones Index was increasing at a very quick rate. Just like every fad, everyone jumps to what is earning (or seems to be earning) the best rate of return at that time.
Is it safe?
Yes, if you properly store your precious metal investments and secure adequate insurance on it. Also, you need to buy and sell with a trusted broker or intermediary.
Thankfully, OneGold makes investing in precious metals simple and straightforward.
Is it Smart to Invest in Precious Metals?
Well, it depends on your overall portfolio and the investment allocation.
Does that mean that precious metals wasn’t a good investment?
No. It just means the concept of investing in precious metals has declined for the average population.
The barriers to entry were more difficult and you needed a good chunk of money to start out. Combine those factors with the precious metals market not be talked about on the mainstream media, you see less investment happening by the average worker.
The ultimate investment strategy is to put money in many areas. Some will be winners. Some will be duds. But, the overall investing approach should net you a positive investment.
Diversification means your portfolio includes the following: domestic stocks, international stocks, bonds, cash, foreign currency, and real estate. Many times a simple index index fund that follows the S&P 500 will diversify into many of those already. More on this type of strategy.
You don’t need a huge nest egg to start investing with precious metals. You just need to take a percentage of your overall investments to make precious metals a good investment.
How to Start Investing in Precious Metals?
First, you have to decide if you want to store your precious metals yourself or if you want to use a digital management system. The other alternative is investing in a precious metal ETFs or mutual funds.
For me, I decided to use OneGold to start investing with precious metals.
The process was much simpler than I anticipated and it helped me to diversify further, which is allows a good thing.
A couple of key money management tips first. Make sure you have these things done first: