Every portfolio needs gold, but the question is how to invest in gold index funds? You can own actual gold, but you have to find a safe place to store it. You can own gold mining stocks, but a lot of individual companies' stock prices can be extremely volatile and vulnerable to the shocks of the market. Many experts recommend investing in gold Index Funds, which are a collection of various gold stocks. However, not all gold index funds have the same purpose or accomplish the same things.
Do Research. Decide which gold index funds are right for you.
- If you want exposure to actual gold, it is a good idea to find gold index funds that track the price of gold bullion. This is the second best thing to actually owning the yellow metal, which is not a possibility for many people, because it requires secure storage.
- If you want gold index funds that are very closely levered to gold itself, you might consider investing in gold futures. In this case, you need to decide whether you want maturities from three months to three years. Some investors diversify their futures investments and choose various maturities to hedge against risk.
- Consider buying gold index funds that track gold miners. For investors who want to put their money in gold index funds but are concerned about the actual price of gold and its volatility, it might be an idea to buy gold miners. There are gold index funds which track the performance of mining companies. The disadvantage here is it might be too indirect an investment in gold, as mining companies may decline in ways that aren't related to the actual price of gold. However, when gold prices are low, some mining companies might actually make money. Some investors buy gold index funds that track the price of gold and other funds that track miners as a hedge.