Investing In Gold and Silver Part 3–The Markets Option.

Time To Look At Other Investing Options…

In Part 2, We went into more detail about directly buying silver and gold. Now, let’s look at the investment side of precious metals.

You have other options for investing in gold and silver–the stock market and the futures/commodities market. These options are two that I personally am not using at the moment, though it IS on the table for the future. There are also gold based retirement funds and general gold and silver funds–which are NOT on the table, and shouldn’t be.

Investing In Mining Company Stocks

Investing in mining stocks is often a long term proposition–as mines themselves have a “lifespan”, and a new mine can literally take a decade or longer to begin operating. Traditionally, mining stocks appreciate in value when the confidence in the dollar is LOW, and decrease when confidence in the dollar is HIGH.

The advantage to buying mining stock is a fairly simple thing to understand–most are not expensive, and many pay dividends on a quarterly basis. When buying ANY stock, it’s a wise idea to go for the option that offers dividends over one that does not, and arrange to have the dividends reinvested automatically. This not only avoids the taxes on dividends earned, it greatly increases your investment leverage without costing you more out of pocket.

Choosing A Stock, For Newbies

Here is the really really simple checklist:

  1. If you have a choice between a stock paying dividends and one that doesn’t–get the dividends, and arrange to re-invest. In a “bear” market (negative), the worst that happens is no dividends. In a “bull” market (good) Higher dividends. As a rule the dividend stocks retain more value as well.
  2. Next, look at the PRICE TO EARNINGS RATIO. That link explains in simple terms. A BIG number means  it will take much longer to get a return on your investment, barring unexpected events. a SMALL number can be EITHER a company in trouble, or an undervalued company–so research.
  3. DO NOT DAY TRADE! Set up an account with a reputable trading company online, and plan on holding your stock. Day trading can wipe out your nest egg.
  4. ALWAYS keep some ready funds available somewhere that you can transfer to your stock fund. There WILL be market corrections coming, and when the market crashes, you’ll have funds to take advantage.
  5. RESEARCH THE COMPANIES WELL. A good place to start with stocks is on stock exchanges themselves like THIS ONE Another good option, and worth the subscription, is YCHARTS. Ycharts and Marketwatch are my go to sites. Note the link to marketwatch takes you to a gold mining stock, and the NASDAQ link takes you to their outlook for mining stocks. 
  6. DON’T put all your “eggs” in one basket. For instance, for the “gold and silver/mining” percentage of your portfolio, invest the cash in 2 or 3 different companies. Same with any other sector. That way, if companies experience a hostile takeover or are bought and sold, you can also profit :-).

Wow–Looks Scary Complicated, But ….

Actually, it isn’t–when you are buying and holding, which is what you should do. You’ll find gold mining stocks running anywhere from 3.00-30.00 or so per share on the list at the NASDAQ industry outlook link above.

Mining stocks should be handles the same way physical precious metals are–DOLLAR COST AVERAGING. Add a chosen mount to your investment account on a bi-weekly or monthly schedule, and LEAVE IT ALONE. But keep funds available for market corrections!

Remember this: AMERICA CREATED THE LARGEST NUMBER OF MILLIONAIRES DURING THE GREAT DEPRESSION–because smart people got assets and BOUGHT land, businesses and stocks at pennies on the dollar.

BTW–There’s An App For This!

Here are some links to information on various apps for investing:

  1. Huffington Posts’s Top Ten Investment Apps list. If you’re not into just buying mining stock, I HIGHLY recommend the Acorns App. It truly is set and forget, and the mix of stocks is a good one. Also, as it rounds up debit/credit card purchases and invests the change, if you’re a heavy card user you’ll build value quickly.
  2. STASH INVESTMENT— This app lets you invest as little as 5.00 at a time in a basic portfolio, or build your own, and it automatically debits your bank account of choice at regular intervals. The app is very easy to use, and fees are low.
  3. EXPLORE THE INVESTMENT GAMES! Google play is loaded with games that teach investing, and other more serious apps to turn you into a guru in baby steps. Other good search terms are “investment training”, “investment courses”.

 

All of the above options give you the ability to “set and forget”–which also helps you avoid the urge to day trade. And with mining stocks well priced right now, you have a good opportunity to begin building a portfolio for the future.

OK–So How Much Is Good?

If you’re using Acorns app, then you’ll never notice–it’s funded by the rounding up method. To give you a basic idea, in our house we are daily card users for the most part–debit card, and the “keep the change” savings option typically adds about 40.00 a month to our savings account/ Acorns account.

If you are using stash, then dedicating 50.00/month–25.00 every 2 weeks–works very well if you can afford it. We also dedicate the same amount of money to a savings account linked to the app, so when the market corrects, we’ll have a nice chunk of cash to buy stocks.

THIS IS THE SINGLE BEST THING YOU CAN DO TO TAKE ADVANTAGE OF LONG TERM STOCK INVESTMENT! Regular investing, with matching funds for larger buys available, allows you to profit both from the current strong bull market AND from any corrections.

In the next installment, we’ll look at things to avoid–the “paper gold” market.

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