Consider Gold Mutual Funds When You Compare Mutual Funds

Posted on Feb 28, 2011 in Gold Mutual Funds | 0 comments

If you are thinking about buying a mutual fund, it’s important to be willing to spend the time to compare mutual fund and find the best one for you and your goals. This is particularly important if you are buying gold mutual funds as a hedge against an iffy market.

Most investors know, or at least have heard, that buying gold to protect them in uncertain economic times is a sound idea. What they may not know is that you don’t have to actually go out and buy some gold bars, though you can if you want to.

A lot of investors want the security but they don’t want difficulty of making sure that the gold bars are worth the asking price not to mention the shipping and storing hassles.

So, if buying gold bars does not sound like your cup of tea, you can get the same advantages if you compare mutual funds and buy the best gold mutual funds you can find.

Gold mutual funds don’t all invest in actual gold. Some do, but most invest in companies that deal in gold such as mining companies and jewelers. For the ones that do actually buy and sell actual gold bars, those bars are then stored in a bank or other secure location.

Most owners can choose to get the actual gold or they can opt for the cash value of the gold. Remember, that the cash value will be determined when you sell off your gold and it could be less than when you bought it (though with today’s overheated market that’s not very likely).

If you invest in gold mutual funds that invest in companies remember that the further that company is from the actual gold, say a company that uses gold to produce their products, the wider the variance you will see between the price movement of your mutual fund and the actual price of gold.

The closer you are to the actual gold, like with an actual gold mine, the less variance you will typically see. Another thing to keep in mind is that gold mines can suffer from bad weather or labor unrest and that can drive your mutual fund down. Many gold mutual funds investors actually see their prices going down even while the price of gold goes up.

Remember, too, that all mutual funds are not created the same. They all have their own philosophies and managers and some will simply fit into your overall investing strategy better than others. Take your time and look over the prospectus from any mutual fund before you invest.

You know that all investments carry some risk. To minimize that risk, make sure you have educated yourself about your various options and you’ve done some research into the fund and the fund manager and have an idea of what their track record is.

When shopping, don’t forget to compare mutual funds and especially gold mutual funds to find the one that fits your goals and investment style.

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