Investing in gold is a great way to diversify your portfolio and protect against inflation. Most experts suggest that gold should represent no more than 5-10% of your portfolio, as this will ensure that you have room for other investments such as mutual funds, stocks, and P2P lending. However, it is important to be mindful of how much gold you include in your portfolio, as it can be risky to invest too heavily in one asset. The easiest way to add gold to your portfolio is through an ETF called SPDR Gold Shares, commonly known as GLD.
Research has shown that the “sweet spot” for the percentage of gold in a portfolio is 20%. This provides the best balance between risk and reward in the long term. Ashraf Rizvi, founder and CEO of Digital Swiss Gold and Gilded, suggests that investors should consider their risk appetite and asset mix when deciding how much gold to include in their portfolio. There are several ways to invest in gold, including ETFs, shares in gold miners and partner companies, and physical products.
Contracts can also be used to gain exposure to gold without owning the underlying investment. Additionally, some banks and investment companies issue gold certificates granting the holder ownership of a portion of their gold holdings. Gold mutual funds are actively managed by professional investors and may provide a good balance between risk and reward. When investing in gold, it is important to consider the cost of buying a gold bar or ingot, as well as the cost of storage and insurance for your investment.
Investing in shares of companies that mine, refine, and trade gold is a simpler option than buying physical gold. In conclusion, investing in gold can be a great way to diversify your portfolio and protect against inflation. It is important to be mindful of how much gold you include in your portfolio and consider all the ways you can invest in gold before making any decisions.