One of the main questions on the lips of many first-time precious metal investors is “How much should I buy?” If you have never invested in anything before, it can be a tricky question to broach, and even if you have, the fact that the precious metal markets act like nothing else makes this a very difficult proposition.
Not Quite a Gamble
Investing in precious metals is not quite the same as putting money on a horse or a football game. It is a gamble in one sense, but not to the same extent. The issue with gambling on sports or horse racing is that you either win or lose, whereas even if you sink everything you own into silver, you’re unlikely to lose it all. The markets may dip or even crash, but at no point will silver be worth nothing.
The beauty of these metals is that they are very useful. Humans have hoarded them for thousands of years because of their beauty, but even if everyone suddenly decided they were ugly and pointless, they are still vital to industry. They are needed in the computing and electronics industries, to name just a couple.
Not Quite Stocks
Going by what we said above, you should always invest more in precious metals than you would bet. However, you shouldn’t invest as much as you would in the stock market. The stock market is very volatile and it can crash, but over time it is relatively safe. That has nothing to do with our reasoning though. It’s all down to the fact that stocks will produce dividends, giving you a return every now and then. This means that if all of your money is tied up in stocks, you will still be drip-fed a profit.
We firmly believe that precious metals are a better investment than stocks, but they will also freeze your money until the day you sell them all. On this day you stand to make a big profit, but until then you don’t see a return.
Therefore, try to think of precious metals like you would a savings account that freezes your money for a few years. They are a very safe investment, but they will tie up your money for some time. Try to find the right balance. If you have $2,000 left every month after you have paid the bills, look to invest half of that in precious metals and hold the rest in your bank. This is a tactic used by many investors. The money in your bank will cover you for a rainy day, but if you find that it just keeps building up month after month, then by all means invest more of it into precious metals.
Never invest more than you can afford and don’t let the lure of shiny silver tempt you out of every penny you earn. This is a great way to invest your money, but it is one that needs time to grow, especially in the current climate.