How to Invest in Gold ETF

by Gil on April 20, 2017

It is often true that gold turns out to be a quite good choice when it comes to alternative option when investing. However, it is not recommended for people to keep a large pile of gold bars with them because of security reasons.

The better choice if someone would like to invest in gold is to study how to invest in gold ETF. An exchange-traded fund (ETF) is like a mutual fund that is being traded in the stock market. You can buy and sell ETF like a normal stock or security.

However, there are quite a few things that the investors should have to know in advance with regards to investing their money in this particular investment scheme.

Firstly, the investor must first to know what gold ETF really is.

In layman’s term, gold ETF is an exchange-traded fund in which gold turns out to be the only commodity involved. Like what have said earlier, ETF can be bought and sold in the stock market like what a normal stock does.

However, investor will have to keep in mind that by investing in it, they do not necessarily invest in a physical gold like bars or coins. Instead, what they are actually investing is an asset with gold backing in it like a gold mining company or a company involve in trading gold.

Secondly, the investor should choose what kind of gold ETF they want to invest.

There are many gold ETF in the market today. In most cases, GLD is the best choice. It is known as a spider ETF as well.

A large number of financial advisers as well as analysts see gold as a requirement when it comes to someone’s portfolio. The investors can use it as a means to minimize risks in their baskets of investments.

Thirdly, the investor should consider distributing the risks when investing in gold ETF.

Spreading the risks to a handful of investments is a better choice compared to putting all the money you have earned in a single gold company. This also gives the investors a good leverage when some bad things happen in the stock market.

For an example, when there is a rapid increase in the price of gold, the investors won’t have to bother losing their money due to a gold company doing bad in business. All the investors will have to care about is the gold price.

Finally, the good thing about investing in the gold ETF is it easy to understand.

If someone wants to invest in gold ETF, he must open a stock account. This can be done online in most of the developed countries like US and Australia.

The investor can access their brokerage account online and then place their order as they would a stock as long as it has enough money to cover his purchase. He only need to choose the right ETF he wants to invest in and enter its ticker symbol. After successful purchase, it will be added in his portfolio.

However, there are times when an investor does not have any access to the Internet. Fortunately, this does not necessarily mean they won’t be able to purchase the gold ETF. They can still place their order by phone.

How about you? What are your tips when investing in gold ETF? Do you have strategies to share?


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