Investing in gold has become increasing popular over recent decades. The concept is easier to grasp than those of stocks because it involves an actual physical product: bullion. There are more ways to buy and places to buy from than ever before. However, this means unwitting investors have to be careful about where they put their money and whose hands they leave it in.
Educating yourself is the first line of defense against fraudulent companies that sell bullion. Taking the time to thoroughly research whom you buy from is the best way to find out if they're legitimate. Whether you're thinking of buying from an individual or through a wealth management firm, keep these things in mind:
1. Learn the terminology. As with most industries, the world of bullion has plenty of lingo. By making yourself an educated consumer, you are more likely to get a return on your investment and less likely to be taken advantage of by fraudulent companies. There are also facts surrounding bullion that are important to know. Take gold bars, for instance. An educated investor should know that most gold bars in the world are 24 karat, which is the purest form of gold.
2. Know when to walk away. When you start looking around for the best company to invest with, avoid sales pitches that pressure you to 'act now.' Investing is a serious commitment and it's important to take the time to find the opportunity that best suits you. Throughout the process of investing in bullion, no one should ever make you feel pressured. If they do, walk away.
3. Know where and how you're going to store the bullion after it's purchased. Some investors choose to keep their bullion on their property, perhaps in a fireproof safe. Others choose to rent an offsite storage facility or let the seller keep it safe for them. You may also want to insure your bullion. These things may incur extra cost, so be prepared for that.
While risk is a natural part of investing in gold (or anything for that matter), there are some risks that are easier to avoid. Buying from a reputable company that values transparency with their clients is the best way to avoid investing your money in a fraudulent product.
Have you invested in bullion before? Would you think about it in the future? Sound off in the comments below!