With inflation hanging around, a lot of people are turning to things like gold and silver as a safe bet on how to guard their cash. If you are just venturing into all this for the first time, do not panic – it is really not as complex as it may appear. Consider this your introduction to getting your feet wet in the world of precious metal investing.
We are going to take you through some important things you will want to consider. It is really all about making intelligent decisions so you can diversify your investments and keep your hard-earned money safe and sound.
First Things First: What is Your Investment Play Money?
Okay, let us get real about your budget. This is most likely the most critical step! Before you even begin fantasizing about glittering bars of gold, you must determine how much you are actually comfortable spending. The golden rule of any investment is: to only put in what you can afford to lose.
Now, I know what you are thinking – “lose everything?” Though highly unlikely you will lose all your money when you invest in precious metals, their value can dip. We experienced this with the price of gold back in 2012, to give you an example.
So, do not overextend yourself. If buying precious metals means you are unable to pay your bills or necessary expenditures, then it is not the right amount or the right time for you. Begin small if you must, and as you become more at ease and your finances are on stable ground, you may always find ways to grow your investment in the future. Consider it a marathon, not a sprint!
Storage Options For Your Precious Metals
Great, so you have determined your budget. Wonderful! The next big question is, where are you going to store your precious metals after you purchase them? That is really a significant thing to consider because these are not like stocks you look at on a screen; they are physical holdings.
You have several options here, each with its own advantages and disadvantages:
- Dealer Storage: Most good precious metals dealers provide storage. This is really convenient because they take care of the security and logistics. You purchase the metal, and they keep it in their safe vaults. But this convenience has a price tag – typically, you will be charged a fee for this option. It is like paying rent for an extremely secure, specialized storage space. Be certain to know their insurance policies and audit controls if you decide to go this way.
- Safety Deposit Box: A common choice is to lease a safety deposit box in a bank. This allows you direct access to your metals, and you know they are in an extremely secure location. As with all these types of accounts, there is a charge, but it is usually quite low. Just be aware that banking hours may restrict when you can receive your metals, and you will have to factor in how far away your bank is.
- Home Storage: If you do decide to store your precious metals at home, you downright, positively require a safe place to put them. We mean a good-quality, fireproof safe bolted into place.
Do not just hide them under your mattress! Although this saves storage fees, it does leave it all up to you to keep them secure. You will also want to take into account such factors as insurance coverage of precious metals in the home and the overall security of your residence.
For smaller amounts, a securely hidden safe could suffice, but for larger investments, you will typically want professional storage or a safety deposit box as a wiser option.
Consider your comfort level with each choice. Do you want the assurance of professional storage, or would you rather have easy access to your investment at home?
Time to Buy! Making Your Precious Metal Purchase
Okay, you have got your budget in hand, and you know where your new glittering investments will reside. Now comes the best part: actually purchasing them!
Let us assume you have made up your mind to purchase silver. Or gold. Or platinum! The first thing you will have to do is locate a trustworthy dealer. This is simply essential. Just as with any major purchase, you want to work with someone reliable and long-established. A quick internet search will yield many possibilities, but do not go with the first one that comes up.
Here is what to seek out in a dealer:
- Reputation and Reviews: Look at online reviews (Google, Trustpilot, relevant forums). Do they have a good reputation? Are their customers satisfied with their service?
- Transparent Pricing: The cost of the metal itself is set by the international market. Dealers also charge an additional “premium” on top of this (their profit and operational expenses). An honest dealer will be clear about these charges. Get quotes from multiple dealers to be sure you are paying a reasonable price. Ask them to break down all of the charges.
- Product Variety: Do they carry the particular type of metal and shape (coins, bars, rounds) you are looking for?
- Customer Service: Do they answer your queries in a timely and concise fashion? Are they friendly and knowledgeable? You want a dealer who facilitates an easy purchase and whom you are confident about asking questions.
- Delivery and Insurance: If they are having the metals delivered to you, how do they ship, and what is their procedure? Is the shipment insured?
Keep in mind that, though the underlying cost of the metal is influenced by market prices, all those “other fees” (such as commission, shipping, and handling) can add up.
Therefore, it pays to do some research and shop around for the various charges of different companies. Compare them until you find a dealer whom you are comfortable with – one that does not charge high commission and offers quick, dependable service, either when you buy or ultimately sell.
Selling Your Precious Metals
So, you have invested, you have kept your precious metals, and now it is time to sell some or all of them. This is another where most people make a common mistake: they just sell back to the company they bought from. Convenient, yes, but could mean you are not getting the best deal you can get!
Just as when you are purchasing, you have to research when selling. Various companies will have varying buying prices and fees. It is merely a matter of comparing the rates that they have to offer.
- Compare Buy-Back Rates: Call a few reputable dealers and inquire about their current buy-back rates for the metals that you have. The offer they make will typically be some percentage less than the current market spot price, but that percentage difference can vary widely from dealer to dealer.
- Know Their Fees: Some dealers may charge additional fees for processing sales. Ensure you know all possible deductions from your sale price.
- Think About Convenience vs. Return: If you have just a small quantity of gold or silver to sell, the variation in price between dealers may not be enormous, and the most convenient option is okay may just be okay. But if you have a larger quantity of precious metal to sell, those tiny variations in charges do make a big difference. That is where shopping around can literally place more money into your own pocket.
Consider it this way: you would not sell your vehicle to the first lot you visit, right? You would drive around and look for the best deal. Take the same smart thinking and apply it to your precious metal investments.
Conclusion
It is really never too soon to begin investing in precious metals. As you have noticed, it is not a particularly difficult process, but it does involve a little bit of planning and research at the front end.
By being thoughtful in advance about your budget and your storage situation, and taking the time to locate solid dealers for buying and selling, you will be in great shape.
Shrewd investing in precious metals can be an excellent means to diversify your portfolio of investments, safeguard your wealth from inflation, and possibly enjoy some really pleasant dividends in the years ahead.