Are you an investor? If your entire portfolio is sitting in one basket, such as stocks, you may want to diversify your portfolio.
Every seasoned investor knows that the key to weathering storms and preserving wealth is diversification. Sure, stocks might provide you with some excellent returns in the short term, but what happens when the economy tanks? Your net worth may plummet, which is why you should have precious metals on your balance sheet.
Precious metals are less susceptible to market fluctuations. And the best part? You don’t have to be an expert; just invest in the best precious metals ETF to gain exposure to a variety of metals in one, seamless transaction.
Wondering what the best ETFs for those interested in precious metals are? Keep reading to learn how to start investing in precious metals the easy way.
What are Precious Metal ETFs?
There are many ways to buy precious metals. Yes, you can still buy physical bars and bullion if you want the real thing. You can store it yourself if you feel the need, as many silver collectors do.
This is a popular option for those who collect old coins, such as those produced by the US Mint. You can see here that many of the coins produced over the years have a high value for their silver content.
Or, if you buy physical gold bars, you can keep them locked up with a custodian.
But physical metal isn’t very liquid. That’s why many people prefer to trade shares of metals on the stock market. Rather than buy individual shares of various metals, however, investors usually choose a gold and silver ETF, or exchange-traded fund, instead.
ETFs are funds that will buy physical metals. They then make shares of the fund available to investors, so that you’re one transaction gives you exposure to various metals beyond gold and silver.
Choosing the Best Precious Metals ETF
So what is the best gold ETF available? How do you choose between the different funds on the market today?
First, look at what assets the fund is focused on. There are certain funds that only invest in a single metal, such as gold, silver, or platinum. These can lead to the best gains in good years, but also have the highest degree of fluctuation.
If investing in a single metal, understand what drives its value. Platinum, for instance, has a value that is directly linked to the automobile industry. So when the motor companies are booming, platinum usually is as well.
Also, do you want to invest in physical silver and gold, or are you interested in futures contracts? Funds are available that focus on either.
Then, consider the fees. Every ETF has an expense ratio, which is what you’re going to need to pay the fund managers.
Also, look at the past few years of performance. Compare them with indexes related to precious metals as well as stocks, to see which fund is worth investing in for the long term.
Metals Provide Peace of Mind
There are less than 20 ETFs that focus on precious metals. Choosing the best precious metals ETF isn’t that difficult if you understand the metal you are investing in, its expense ratio, and its year-over-year performance.
While your precious metals are unlikely to provide high returns, they can provide a safety net during especially turbulent times.
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