For many people who have just inherited a sum of money as part of an estate the range of options available as to what to do with it can seem bewildering. Many people choose to splash out and make a large purchase such as a new car or expensive foreign holiday, others may plan home renovations or even a move if the sum is large enough.
Another option is of course to invest the money, banks and other financial institutions are likely to advise on their own products which will for varying returns lock away money for a set period and accrue modest interest on the investment.
An increasing number of people are exploring non traditional avenues for their money and with the wealth of information available on the internet now there has never been a better time to broaden your portfolio and make some alternative investments.
The opinions contained in this article do not constitute financial advice, you should always seek independent professional financial advice before making any investment decisions.
The need for balance in a portfolio
When considering how to invest a sum of money it is tempting to take the easy option of simply putting the entire sum into one saving account, perhaps with a bonus introductory rate and locking it away for a fixed term in order to gain a further increase in the interest rate paid on the balance of the account.
Unfortunately this style of investing does not take into account any emergencies that may occur where you require access to the funds in your savings account and could lead to penalty charges against the account which end up costing you money rather than gaining it.
A better option for many people is to split the total amount into smaller chunks that are able to be invested in a variety of options, such as stocks and shares, savings accounts, ISA’s and the subject of this article Investment Gold.
It is important to decide upon your personal appetite for the risks associated with investment as values can rise and fall and leave you with less money than you originally invested. Financial advice should always be sought from a professional financial advisor before making any investment decisions.
Current bank of England interest rates leave little incentive for savings accounts and the charges associated with a professionally managed portfolio of stocks and shares can be off putting as can the complexities of the stock market should you choose to go alone with your investments.
A diverse and well balanced portfolio with some money locked away in savings, investments and stocks and shares can be supplemented with the security of Investment Gold.
Investment Gold is a commodity rather than a currency and as such is not subject to the drastic fluctuations that can affect the currency markets and is insulated against the worst of the stock market changes. This is not to say gold is immune to fluctuations in price with the current price per gram around five year lows, however historic trends show gold steadily rising in price over the medium to long term.
Important things to consider when investing an inheritance
As with all investments you naturally want to limit the risk and maximise the reward for your investment.
Firstly you need to consider how much of your inheritance you plan to invest and how much you plan to use on paying off any debts such as credit cards and mortgages.
The amount that you decide to invest will also most likely be broken into smaller sections based upon your investment goals and risk aversion with regard to possibility of losing money on an investment. A professional financial advisor will be able to identify these risks in relation to your personal circumstances.
Another consideration is for how much money you may need in the event of an emergency. Many investments have penalties attached to them in the terms and conditions which therefore make these not the best option to cash in should you require a lump sum of money to cover an emergency.
The amount of money that you have decided to invest in Gold and your future plans for using the money invested will influence the type of product that you purchase.
For instance someone wishing to invest a large sum for the foreseeable future would benefit from investing into as large a gold bar as possible to limit the associated fashion charges added to the purchase price for production and packaging.
If however you anticipate needing a smaller sum of money at more regular intervals it is a better option to purchase coins or bars equivalent to the amount you anticipate needing in the future as these can be more easily sold as required without the need to sell a larger bar and reinvest any remaining sum in new coins or bars.
The advantage of a physical investment
Investment Gold is a physical investment, in that you invest your money and receive a tangible product in return that in itself has value unlike savings accounts and stocks and shares where the actual product is an intangible, one which has no real equivalent and is a product of the financial industry.
For some people this is a good enough reason for investing in gold as they prefer a solid asset which they can physically see rather than the promise of a value contained in a document which could cease to exist in the event of a financial crisis leading to corporate bankruptcies.
A further advantage of physical investment in gold is that the asset is immediately available, depending upon the storage options chosen and discussed below, should you need it in the event of an emergency. Many pawnbrokers deal in precious metals and the ability to secure a short term loan quickly and easily against the investment gold is a benefit many people build into their investment plans in the event of an emergency.
Storage of Investment Gold
Investment Gold comes with a range of benefits such as being VAT exempt and free from Capital Gains Tax when in the form of Gold Coins so it is easy to believe that it is the perfect investment option.
One consideration that has to be made however is the storage of your investment. This is an often overlooked aspect to purchasing Investment Gold and gold coins and should not be ignored as the value of only a small number of gold coins can reach into the thousands of pounds bracket very quickly.
Of course you can choose to store you gold at home however this becomes a more risky proposition when dealing with larger and larger values of gold bullion. Standard home insurance may not cover the value of Investment Gold when stored at home or alternatively may require additional premiums in order to cover the value of Gold stored in a domestic property.
Home insurance policies are also likely to require some level of security at the property in the form of alarm systems and safes to securely store the gold bullion and the cost of this required infrastructure can be an expensive proposition.
For larger sums of investment gold a more sensible option would be to pay one of the many companies who professionally store gold to look after your investment. These companies are often insured and provide secure storage for you Investment Gold and have in many cases replaced the former Bank safety deposit boxes which have become far less common in recent years.
An example of this service can be seen here:
Choosing a Trustworthy Company
When researching companies to store your gold you should always check that the contents of your deposit are fully covered by insurance and have an inventory with proof of purchase for all of the Gold you possess should you be required to make a claim.
It can also be beneficial to check if any customer testimonials are available from customers who have previously used the service. Most reputable companies will have some form of third party independent review systems which allow you to see what people have been saying about their experience using the company.
See our trustpilot review page via the following link as an example of this kind of independent review system.