When it comes to investing, there are so many great ways of making money. Many people trade in stocks and bonds as well as in foreign exchanges and real estate. Everyone who invests has their own portfolio and it should be as diverse as possible in order to reduce the risks involved with investing. Most people who invest chose to protect their portfolio by also investing in a stable commodity like precious metals.
In even the worst economy, investing in gold is great idea because the value will never go down. Sure the values fluctuate in small amounts, but the absolute value of the precious metal will continue to increase as the years go on. These small fluctuations in value are the margins that many short term investors play with if they have enough leverage to do so. However, most investors choose to invest in gold as a long term investment; they will hold on to the commodity for as long as they can before selling it for a substantial profit.
Nothing beats owning gold bullion; everyone likes to look at it shine. But owning bullion is a dangerous thing because if anyone else knows that you have large quantities of gold in your possession, it can place you and your family at risk. With that said, if you would like to own some real bullion, the best place to go is your local coin collection shop which sells many different sizes and shapes of gold, platinum and silver bullion bars, plates and coins.
There is of course a much easier and safer way of investing in gold. Most investors today make use of gold exchange traded funds.
Any brokerage account gives you the access to purchasing these Gold ETFs. In all simplicity, a gold exchange traded fund is nothing more than the purchase of stock in a company that invests in gold. Keep in mind that at no time are you actually purchasing any gold, but rather investing in a fund that is used to purchase gold.
Many brokers will tell you that a gold exchange traded fund is the actual purchase of bullion. The name says itself that it is nothing more than a fund. It is no different than investing in a hedge fund, or any other form of investing funds. You money is pooled with other investors and is used to purchase gold in large enough quantities to make it more profitable.
An ETF is nothing more than leverage. The larger the fund is the more leverage it has and therefore the more profit that can be made when investing in the fund. Sure, it is possible to invest in gold commodities on your own, but if you do not have the necessary leverage, then there is no real way that you are going to be able to make enough profit in the short term to make it a good investment.
In most cases, over a long period of time, ETF values actually decline due to a variety of factors. At no time should they be used for a long term investment. If you are looking for a long term stable investment, than you invest directly I gold commodities. When you are looking to make more money in the short term, then you invest in a gold exchange traded fund.
Always remember that when you choose to invest in anything, the greater the profit potential, the riskier that investment is. Since there is more profit potential when investing in ETFs, they are therefore riskier. Several major ETFs have fallen in recent years and many people have lost huge amounts of money because they tried to use the exchange traded funds as a long term investment.
At the same time, it is always important to remember that you should never invest any money that you cannot also afford to lose if the fund goes belly up. If you invest money that you cannot afford to lose, then you will be in a very bad position should the fund lose all of your investment.
Remember that if you are looking to diversify your portfolio, investing in precious metals is a great way to do so. However, always remember that when it comes to investing in gold, Gold ETFs are for short term investments only and commodities are for the long term.
As with any short term investment, make sure that you research the fund you plan on investing with prior to giving them any money. Some funds are doing exceptionally well, but may also be a riskier investment depending on many factors. Learn as much as you can from others about selecting a good fund.
At first, you can expect to lose money time and time again until you come to understand the process of selecting and investing in gold exchange traded funds. As time goes on and you are taking the time to learn as much as you can, your ability to become more profitable will improve. However, there will always be an inherit risk associated with any form of investment and no matter how good you get at trading, there will always be the potential to lose some or all of your money.Dan Craig