Proper asset allocation when gold investing in your precious metals IRA is a great way to keep your portfolio strong and safe. Because gold is a popular commodity for individuals engaged in gold investing of all experience levels, we have compiled a few strategies to help you wisely allocate your gold investing in your precious metals IRA:
#1 Light Allocation Strategy
The investor who chooses a light allocation in gold investing will typically choose for physical gold to comprise between 5% and 10% of their precious metals IRA. An investor who chooses light allocation will most likely be quite confident that our economy will stay stable within the near future, but is still working with a smaller amount of portfolio insurance.
Investors who are lightly allocated in gold investing are advised to consider light allocation in currencies of economically stable countries, or light allocation in other commodities as well, to keep their portfolio well balanced in their precious metals IRA.
#2 Moderate Allocation Strategy
Investors who choose to moderately allocate in physical gold investing will likely consider investing between 15% and 25% of their IRA’s assets in physical gold investing. Investors frequently choose the moderate allocation strategy for gold as a reflection of today’s somewhat erratic economy.
Investors who choose moderate gold investing allocation are often savvy to investment risks in today’s uncertain financial climate, and are doing so in order to offset any potential loss from financial crises such as inflation.
#3 Heavy Allocation Strategy
An investor who chooses to allocate heavily in physical gold investing will have a precious metals IRA that is comprised of between 30% to 50% gold investing.
Such allocation indicates that this investor feels that the economic climate, with the the value of the American dollar decreasing as inflation rises, is not a good time to invest in more volatile currencies. Those who choose a heavy allocation strategy must remember that an annual review of their precious metals IRA will help to minimize risks of this allocation and setting aside profits should the value of gold rise dramatically. Also, heavy allocators should remember that they must still focus on their portfolio as a whole, rather than simply on one aspect of the portfolio; otherwise, the investor may not be adequately prepared for the long term. If a heavy allocation investor reviews their portfolio annually and re-balances the allocated assets accordingly, this type of portfolio can actually perform better than an all-stocks portfolio. Therefore, it is important to review the assets on a regular basis.
Before gold investing, it is always important to learn from others’ past mistakes in order to avoid them. Be sure to formulate a precious metals IRA asset allocation strategy that is best for you, before investing. Choose the level of allocation that feels most comfortable to you, with a tolerable risk level. Above all, don’t forget to rebalance your precious metals IRA portfolio annually in order to keep it strong and stable.