Jul
22

Buying Gold Based Investment/Mutual Funds & ETFs Safely

For individuals who like the idea of owning gold but not confident enough to pick stocks, buying mutual/investment funds is a very good alternative. It allows the investor to own a diverse portfolio of gold based investments that have been selected by a professional. There are a diverse range of investment/mutual funds available for the gold investor and there is the option to opt for solely gold based funds or a precious metals mix.

Understanding how to analyze an investment fund is almost as complicated as analyzing an individual stock, but the following should be considered before choosing a particular fund.

Funds Can Have Costly Fees Attached To Them Before going with a fund you should beware that the fund managers will take a fee that comes out of your investment. The actual fee is a percentage of your investment and it can vary depending on the type of fund (typically between 0.2% to 2% or even more). This is an annual fee that is taken from the value of your investment (and it doesn’t matter if they have made or lost you money – they will still take their fee). There are a huge number of mutual and investment funds spanning over all sectors and what they charge can vary quite significantly.

Big Multi-National Run Funds And Their Sleazy Marketing Tricks. Some fund management companies launch new funds frequently (based on the latest investment flavor of the month). This can have an adverse effect on the way your fund performs if enough research/attention is not being given to it.

Performance Tables – Do They Matter? Many experts are divided on the usefulness of performance tables of funds. Many believe that in terms of picking funds performance tables are quite worthless. So should you abolish performance tables altogether? The best thing to do is analyze the performance of several funds over a period of time. Understanding who is running the fund and what their track record is can be as important as anything the performance tables may suggest.

Ultimately, there is no “perfect” method of investing in anything – though investment/mutual funds can be a very good vehicle for the inexperienced person who understands the potential of gold and wants exposure to it from a company ownership perspective. A variation to buying into funds that hold gold stocks is to use an exchange traded fund – here the investor buys into shares that are directly linked to the market price of gold.

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