A Rookie’s Guide To Investing In Precious Metals: What You Need To Know

Many people are interested in investing because they often think of people like Warren Buffett. However, understanding the stock market requires a lot of research, something that most aren’t willing to do. In cases like this, you’re better off investing in things like precious metals.

Investing in precious metals don’t require as much thought as other types of investments, but you’ll need to know what they are. If you have any jewelry, there’s a good chance you own precious metal.

Keep on reading to learn more about precious metals and how to start investing in them.

What Are Precious Metals?

Unlike most things in the stock market, precious metals are things you can invest in that will never go away. Investing in most businesses comes with many risks because they can go bankrupt. Since precious metals are rare and can’t be reproduced, there’s a lot more security when you invest in them.

Gold: Gold is one of the most common metals that people invest in as it’s desired because of its appearance and durability. Aside from jewelry, gold is often used in electronics because of its conductivity.

Silver: Silver is a precious metal that’s often used for industrial use. When you start buying silver, you’ll notice that the price fluctuates often. This is because it’s used in things like electrical appliances, batteries, circuits, and other electronics.

Platinum: Platinum is a much rarer metal than silver and gold and it’s most commonly used for ornamental purposes. It can also be used to make catalytic converters for automobiles.

Palladium: Palladium is used in engines just like platinum, but it can also be combined with gold to produce white gold. This white gold can then be used for jewelry.

Aside from these, you can invest in the likes of copper, iron, and other metals that have a variety of uses. When going into the precious metal industry, it’s best to pick a metal that interests you and stick with it. Some metals will fluctuate more than others whereas some sit around the same price.

Benefits of Investing in Precious Metals.

Investing in gold and precious metals is something that comes with several benefits. It doesn’t take much to start investing in precious metals and you don’t need to go out and start purchasing jewelry. You can invest in precious metals on the stock market like you would with any other stock.

Here are some of the main benefits of investing in precious metals:

Supply and Demand.

Precious metals are hard to come by, but people are always wanting them. The scarcity of them makes both their demand and value increase, especially because we use them in everyday applications. Over time, the availability of these metals will gradually decrease, making them more valuable.

Liquidity.

When you invest in something like a vehicle or home, you can’t quickly get cash from it. You have to go through a long selling process that can take weeks or months. With precious metals, you can take your investments and turn them into cash instantly.

Diversity.

Having a diverse portfolio is one of the best things you can do as an investor because it protects you from losing all of your money. If your portfolio consists of nothing but Apple shares, your net worth will essentially be in the hands of Apple.

Adding precious metals to your portfolio will help you keep a balance between physical assets and stocks.

Protection Against the Dollar.

Although the dollar isn’t as volatile as other currencies – such as the Brazilian Real – it’s still subjected to inflation. This will never go away, but precious metals will never stop increasing in value. If the dollar decreases in value, you can use your precious metals for financial protection in case you lose money with the dollar.

When to Start Investing.

If investing in precious metals is something that interests you, you’ll need to ensure you have the means to start. When it comes to investing in anything, you need money. While you can take the leftover money from your check and throw it into a brokerage account, it’s best to ensure you’re protected first.

Save up an emergency fund to cover you in case you lose your source of income. This fund should last for anywhere between three to six months.

After setting money aside for an emergency fund, you can open up an account at the brokerage of your choice. Some of the best stock brokers for beginners are TD Ameritrade, Fidelity, and Robinhood.

When you open an account, you can start depositing money from your bank account. Depending on the brokerage, you may be able to use the funds within minutes, though some require you to wait until the money processes.

Within the brokerage, you can search for the metals that interest you. You’ll find a plethora of companies that deal with them, but most will be mining companies. The value of a mining company will vary depending on how much they’re acquiring and how much the metals are going for.

Start Investing in Precious Metals Today.

Now that you know how to invest in precious metals, it’s time to start. The main thing you’ll have to do is set money aside to start investing with. From there, you can start looking into the metals that interest you. Some of the best for beginners are gold, silver, and iron.

Browse our articles to learn more about investing in precious metals and other types of investments.

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