I have some money and i am confused whether to inveset in mutual fund or to purchase gold?Guide me.?
Question:
Answer:
In general a good mutual fund will outperform gold over a long period of time--10 years. Mutual funds are investing in income producing assets. Gold is not an income producing asset. Over a short period of time neither is a good investment. Less than 3 years. The best short term investment without doing a lot of research and subjecting yourself to a great deal of risk is t-bills. About 5% for 6 months. Free from state and local taxes.
If you actually buy gold, you have to decide how to store it, and how to sell it eventually. Storage charges can be stiff, and to sell gold requires a broker who charges commission.
Further, you have to be familiar with the purity of the metal, and to have it properly appraised by a specialist.
All these issues make it better to invest in a gold mutual fund, or in gold stocks. You may not have control of the metal, but neither will you have the issues above.
Any financial website like vanguard or fidelity will tell you all you need to know about mutual funds, gold funds, etc.
Do not put all of your savings into a single vehicle, diversify. Read about asset allocation on the websites I listed.
Good Luck
Ask your self what do you mean by short period of time, Is that weeks, months or under 10 years?
If you have said yes to this then if you had thought about investing and holding meaning staying puy in that trade less then 10years avoid the mutual funds.
On the other hand gold stock and any stocks you buy should be as shor term trades from days to weeks. this involve a loot more as to why on this subject that can be explained at a latter point.
So unless you are trading in stocks long and short depending on the direction the markets and underling stock is trending. You be safe to avoid this.
You mat think about investing in ETF they are the most part like a mutual fund. But better because you do not get charged the fees that go along with mutual funds.
If you need access to the cash in short term or incase of a emgercey then look for a high yeilding or interested money market at your local banks or online bank. Example I had a money market that had $130,00 cash in it earning about $300 plus a month. with a rate under 4%.
Be very carefully with bullish trades in the first few months of the new year. The markets have signals already are showing possible market correction short term for bearish trades. This could be good for sectors like the metals gold is one of them. But the time to enter the bullish trades on gold is not now nor bearish trades.
The breath of the SP500 with give this in the short term.
You might want to look into high yield bond funds to improve your return, but nearly any investment has a downside risk.
When you talk about investing in gold, a good choice would be an ETF (stock-like fund) like GLD or IAU, except that gold is quite high at the moment. These funds are up 40% this year, which can be a sign of more good things to come OR a big drop ahead OR a levelling off. You never know, especially in the short term.
And considering that the stock market it also at a fairly high point at the moment, there is plenty of room for mutual funds to drop, as well.
If you are serious about trying to improve your returns you should do real research and testing before committing to any "high return" strategy. As a general rule "high return" strategies have a high drop potential, and even if they pay off, they can swing wildly up and down on the way up.
If you don;t want to risk your money at all, there are always bank CDs that are paying 5% or so now.
Good luck.
If you have less than $1,000,000.00 USD you should not invest in gold.
do both, if you are investing in multiple asset classes you volatility will go down per unit of return its the key reason why you should diversify.
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