Most investors’ portfolios are paper-heavy since stocks, bonds, and other options in that class tend to produce tremendous gains in the fastest time frame. The problem is the correlation with the market increasing the volatility.

 

When the economy spirals, something it tends to do often, paper assets join it, fluctuating holdings wildly, making a client frantic. What is an investor to do to protect their wealth? Precious metals, perhaps? Go here for a beginner’s guide on precious metal investing.

 

Gold, silver, and other metals boast tracing back in history as a source of wealth that holds its value, capable of hedging volatility and diversifying a paper-dominated portfolio. How can a client get started with these as a method for stabilizing their plan? Slowly and with a well-established firm. Let us look at a few tips to get you started.

Tips To Diversity A Paper-Laden Portfolio with Precious Metals

When you have a portfolio heavy with one specific class of holdings, it is essential to balance that with a stabilizing asset like precious metals. Gold, silver, and other metals boast a stable addition to most portfolios capable of withstanding turbulence in the market, often rising when it dips, and stocks and bonds see losses.

 

That does not mean it is without volatility, but the risks are opposite of those you see in the paper classes. These do not correlate with the market and have a history of holding their value in a tough economy. A few tips to follow when choosing the physical commodity as an investment option include:

●     Develop an investment strategy before taking the step

 

It is essential to build a strategy inclusive of finding a firm specializing in precious metals to work with before you take the step to invest. Finding the right company, one that’s established with years in the industry (read about Westminster Mint), is essential to guide you on your precious metal path.

 

A financial advisor will be integral in ensuring the strategy you are pursuing is in line with putting you in a position to ultimately meet specific goals that you set for yourself for the future and can help you tweak it if not.

 

You do not want to put a significant portion of the investment into these products. A shrewd client will keep their investment conservative with merely 5%, perhaps 10% depending on the strength of the portfolio.

●     Bullion and coins are unique unto themselves

 

Bullion and coins need to be recognized as unique products since bars offer their value based on purity, weight, and the metal’s price. Coins appraisal is determined by rarity, collector value, and weight.

 

For instance, a “buffalo gold coin” compared to a “rare piece-of-eight” (Spanish) might carry the same weight, but the eight will hold a value over 100 x as much as the coin because it is so rare. That is why a qualified broker is crucial to help an investor maneuver through the vast offerings of bullion metal and coinage to determine an adequate strategy to suit their specific situation.

●     Storage is an option and comes with a fee

 

Investors need to consider the costs associated with storage since keeping precious metal products in the home is not necessarily safe with the risk of theft. Vault storage is much more secure, plus comes insured compared to a safety deposit option with a bank or in the home.

 

Depending on the metal will determine the cost since certain different types will be higher than other investments. When combined with other investors’ collections, the charge is less. But in a segregated space, the price point will be more.

Final Thought

Investors with portfolios heavy in paper assets risk heavy losses if the market sees severe fluctuations. Since there have been significant financial crises over the last three decades, the likelihood is great for that to happen.

 

To protect wealth and maintain a sense of stability in a portfolio, clients are choosing to build a strategy that will balance their holdings or, at the very least, diversify the assets using precious metals. Find out how to buy gold at https://www.consumeraffairs.com/finance/how-to-by-gold.html. Gold, silver, and perhaps other metals can help an investor ride a turbulent financial wave and come out still standing.

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January 17th, 2022 by financetwitter

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