The Best Way To Invest In Gold With A 401K | How To Invest In Gold To Build Wealth

by | Sep 2, 2022 | Gold IRA

The Best Way To Invest In Gold With A 401K | How To Invest In Gold To Build Wealth




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Many are asking how they can invest in gold with a 401k. Majority of 401(k) plans do not allow investors to directly invest in gold or other precious metals.

This means you can’t go out and purchase gold bullion or gold coins as part of your retirement plan portfolio. If you really want to invest in gold with a 401K, you can do it through mutual funds or exchange-traded funds or ETFs.

Yesterday, I discussed Gold ETFs. Now, let’s discuss Gold mutual funds.

Gold mutual fund is also often referred to as paper gold. Some 401Ks actually have some mutual funds that offer exposure to gold by holding stocks of companies engaged in the gold mining industry, not by holding physical gold.

For example, your mutual fund may include stocks in the biggest mining companies Newmont, Canada’s Kirkland Lake Gold, and UK-based Nord Gold.

You don’t own gold, just shared in companies who mine gold.

For you to know if you have indirect exposure to gold, check your 401K statement and look if you have mutual funds in there. If you do, check if the mutual fund has exposure to gold.

That being said, your investment’s value is dependent on the mining company not on gold. To others, that defeats the purpose of investing in gold. Gold is a hedge. It is a store of value and it has been proven that it does retain its value.

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A mining company, like newmont, is certainly a stable one but nothing beats the stability of actual gold.

Tha being said, what is the Advantages of Investing in Gold Mutual Fund?

Liquidity is one. Gold Mutual Funds units can be bought or sold from the fund house, investors do not face liquidity risks.
Management is another. Mutual funds are usually managed by professionals so it gives you some level of security.

Now what are the Disadvantages of Investing in Gold Mutual Fund

Gold mutual fund will move with the market and the value of the company, not with the value of gold. As i’ve mentioned, it defeats the purpose of investing in gold.
Your investment portfolio is handled by another individual, chances of losses may increase if the portfolio manager makes the wrong call.
You also need to pay a management fee for the company or investment managers handling the fund. That takes away from your profit margin.

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