There are so many different ways to invest your money, and it’s important to find an investment strategy that suits your situation. For those with higher means, it might make more sense to invest in money market funds or stocks; for others, gold bullion might be the best investment. Gold is one of the oldest valuable commodities, yet many people are a little daunted about investing in it, and they don’t know if it is right for them. This article will look at the different kinds of people who benefit the most from investing in gold bullion and why – such as people saving for pensions, young professionals, new parents, and experienced investors.
UK pension legislation is much more flexible than it used to be. Since 2014, obligatory annuity purchase is no longer upheld, so people have much more freedom to invest in their pensions how they see fit.
Gold, both coins and bullion, is a brilliant investment choice for anyone saving up for their pension as it is renowned for its stability and is sometimes referred to as a “safe haven” investment for this reason. Where other commodities’ value fluctuates significantly from week to week in accordance with the global market, gold tends to be a lot steadier. (Note: gold can still drop in value and is not without risk – it just tends to be a lot less volatile than other commodities.)
If you buy gold, you own it directly, which means there is no counter party risk. Whereas with other kinds of investment, companies can go under and take your investment with them. This cannot happen with gold.
On top of this, the HMRC awards tax breaks for any income people put into pensionable assets that will give people a higher income once they’re retired. This means that investing a little extra income in gold is a good way to lower your tax bill a little, from year to year.
Gold bullion is a great investment for young professionals who have a small to medium amount of capital and are looking to invest. Gold is ideal as it is so much less volatile than many other commodities when it comes to fluctuating market value, and it is non-perishable, so it is never going to decompose or be ruined by natural disaster, such as freak weather. This makes gold a very low-risk investment, which is great if you have some money to invest but are keen to avoid any risk.
It is also a good idea to use any large sums gained from inheritance or from a work yearly bonus to invest in gold bullion. This is because this additional money often just sits in a bank account without earning any value and could be used to generate value if you buy gold at a good time. If you’d like to know when the right time to invest in gold is, it’s worth keeping an eye on the value of gold from day-to-day for several weeks or even months. London Gold Bullion has a widget on its homepage that gives you the value of gold, in real time, each day. Writing the value down each day will give you a keen sense of how gold’s value fluctuates and you’ll know best when to invest any excess money in bullion or coins.
Investing in gold is especially viable for young professionals who are saving to buy a house, as savings accounts currently offered by banks offer almost useless interest rates that usually sit around the 1% mark. Obviously 1% interest is better than nothing, but investing in gold bullion and selling it when the value is a little higher will afford you significantly more than 1% profit. Obviously, gold is a little riskier than a savings account, but many people also like that there is no third-party risk, as there is with savings accounts.
If you’re a new parent, you might not have a single penny to save, as the first few years are very expensive. However, if you do have a little extra income and you’re starting to worry about putting some money aside for your child’s tertiary education, then investing in gold bullion might be perfect for you. For very little cost, you can rent a vault in an assay office or specialist gold storage facility in your child’s name and add gold (and silver as well) to it whenever you like. If you keep an eye on gold prices, you can make sure to old buy gold when it is below a certain threshold and to build up a significant investment over time. Then, when gold prices rise significantly, you can sell the entire investment for considerable profit.
You can also set things up so that family can contribute to your child’s gold portfolio, meaning aunts, uncles and grandparents can add to your child’s gold portfolio whenever they like. You can also set things up so that you have executive power over it until they reach the age of 18. Using a potentially lucrative, but reasonably low-risk investment like gold bullion is a great way to ensure your child has a substantial trust fund when they need it most.
If you are an experienced investor, you may already have included gold (or even silver) as part as your investment portfolio. Many experts recommend having between 5–15% of your investment portfolio in gold. One of the best reasons for an investor to consider gold is that there is no counter party risk, which is where gold differs with so many other types of investment. You have sole ownership over the gold you buy. Including gold and silver bullion in your portfolio is a great way to balance out your high-risk investments with a lower-risk investment.
Another great advantage to investing in gold bullion is that you have absolute control over when you sell. This is especially useful if you are trying to mitigate a hefty capital gains tax bill, as you can wait until a new tax year before selling your investment (provided the cost of gold is high enough, of course).
For experienced investors, gold is a relatively stable investment and the fluctuations on price should be easy for anyone with experience to keep track of and use to their advantage. Another great advantage of investing in gold if you have a large investment portfolio is the fact that gold tends to rise in value during times of political and economic turmoil, as opposed to dropping along with most other commodities and investment sectors. This means that your gold investment could offset any other losses in your investments during an economic crash.
That’s all we have time for. I hope you’ve learned a little more about gold investment and have a better idea about whether you would like to include it as part of your investment portfolio.