Here are the top 5 golden rules for investing in gold
Investing in gold can seem complicated because there are so many concepts to understand or questions to ask. Fortunately, the novice investor can start armed with basic and fundamental knowledge that can guide him in his decision-making and help him achieve his goals.
Here are five golden rules to follow to effectively start investing in gold and avoid the most common mistakes.
Enriching knowledge and knowing the terminology and strategies used in finance are the basic requirements for any beginner before starting to invest in gold seriously. Any investment involves risk, and a number of factors must be considered before and during your capital increase.
You must be able to do a preliminary analysis according to your profile and capabilities, as well as according to your financial goals. Answer the “why,” “what,” and “how” questions. A well-managed strategy can lead you to financial independence in gold.
These five golden rules will help you define your investment plan without falling into certain traps.
Rule #1: Know your gold goals and investments
Your long-term ambitions, which correspond to the question “why”, determine the expected profitability, as well as the period for which you are ready to invest: short-term or long-term?
These parameters correspond to one or more types of assets that must be preferred in order to achieve these objectives.
For example, you can choose the so-called aggressive strategy of investing in gold, hoping for large returns within a short period; you must then resort to high-risk financial instruments.
Alternatively, you can select less risky investments in gold, with a potentially lower rate of return but more stable and profitable profits in the long run. This passive investment strategy is more profitable over a long period.
It’s about managing risk, as well as being realistic about how much time you want to spend in your portfolio.
By deepening your knowledge, you will realize that there are a number of investment strategies: social impact investing, value investing, income investing, growth investing, and so on. Know that it is not necessary to limit yourself to one strategy, on the contrary. You can combine several of them, as long as they match your goals.
Rule #2: Plan ahead to invest in gold
The answer to the “how” question will be determined by the strategy you will develop to build your portfolio. Decide which assets best align with your profile and when you want to commit your capital.
It is very important to know the different types of financial instruments, and what are their characteristics. You should be aware of factors that can impact a market, particularly its volatility.
Keywords in investing: prudence and foresight as well as patience and tolerance, in order to manage the composition of your portfolio, to plan how to compensate for possible losses and not to repeat your mistakes.
Know that not all positions will necessarily be profitable at the expiration you had envisioned.