This June, you might be thinking about adding gold to your investment portfolio as it is a very appealing commodity. Precious metal has many other purposes in addition to being a mainstay in the jewelry business.
However, the potential of gold to stabilize a portfolio is what many investors believe to be its true value. Furthermore, given the backdrop of ongoing inflation and geopolitical risk, it is growing increasingly alluring.
However, you must never invest in any asset carelessly. Rather, it’s critical to make thoughtful investing choices. This is particularly valid for gold investments.
What prudent gold investments ought to you make in June, then? We describe three below:
Invest right now
As of now in 2024, gold has had a great year. The commodity’s price increased by more than 18% to $2,439.98 per ounce by May 20, 2024, from merely $2,063.73 per ounce on January 1, 2024. Gold is currently trading at $2,342.92 an ounce, a decrease from its most recent record high.
However, there can be a chance in such drops. There are typically ups and downs in the movement of financial assets.
The latest drops may therefore only present a chance to buy gold below its most recent record high. Additionally, by acting swiftly, you will be able to benefit from any potential advantages.
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Invest in gold to reduce risk
An investment in gold is safe haven. In other words, investors frequently include gold in their portfolios as a hedge against market risks such as geopolitical, economic, and other concerns.
Furthermore, these threats exist right now. The 3.4% inflation rate in April was much higher than the 2% target set by the Federal Reserve. Geopolitical upheaval overseas persists concurrently.
In addition, this year is a presidential election in the United States, which could have an impact on markets and the overall economy.
Considering these dangers, boosting your portfolio with gold in June can help preserve the value of the assets you’ve saved for retirement.
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Put a limit on your money
You might be inclined to invest in as much gold as you can now afford to acquire, given the dangers outlined above and the fact that it serves as a safe haven. However, that can be a mistake.
It’s crucial to think about your asset allocation while investing and the potential effects of having too much or too little exposure to a certain asset on your portfolio.
“Typically, I’d say investors should allocate around 5% of their assets to gold, but no more than 10% in the average portfolio,” says Matt Willer, managing director of capital markets at Phoenix Capital Markets, an investment management company. “It’s a defensive inflation hedge, but there is opportunity cost on your capital so you really don’t want to overweight into these types of positions unless you have a strong thesis where this sector is going to outperform other options.”
Thus, as you make investments in precious metals, stick to this 10% allocation cap for gold in your portfolio.
