Turning Spare Cash Into Gold: A Step‑by‑Step Guide for Cautious New Investors

You don’t need a fortune stashed away to buy gold. Instead, you can get started with available cash and gradually build your position over time.

Investing a small amount of money in gold at regular intervals — a strategy called dollar-cost averaging — can add diversification and an inflation hedge to your portfolio. Investors have several ways to buy gold, and your risk tolerance plays a key role in determining how much gold you should own.

1. Choose your gold investment vehicle

Buying gold exchange-traded funds (ETFs) and shares in gold mining companies are two simple ways to get exposure to gold and other precious metals. These assets are liquid and often come with low expense ratios. They also don’t require you to consider storage or insurance costs.

However, you can also buy physical gold. You can store gold in your home, or in a bank safe for additional protection. Physical gold is less liquid, and you’ll have to consider storage, insurance and other possible fees.

Gold individual retirement accounts (IRAs) are an option if you’re looking to store your gold in a tax-advantaged account. These IRAs let you accumulate physical gold while enjoying tax benefits, but the custodian holds the gold on your behalf. Do your research: They come with IRS rules, including that you can’t store the gold in your home.

Gold Investor Kit Offer: Sign up with American Hartford Gold today and get a free investor kit, plus receive up to $20,000 in free silver on qualifying purchases

2. Find a low-cost on-ramp

Investing with gold can come with fees, so it's important to look for a low-cost approach. Buying shares or fractional shares of gold ETFs are a good way to get started.

You can typically invest in these funds via the brokerage accounts in which buy stocks, bonds and other assets.

3. Set a habit

Steady investments build a strong ripple over time. Automatic, recurring investments in gold each month can help investors build their positions over time without any dramatic moves.

Investors can use a dollar-cost averaging strategy to capitalize on any dips. Lower gold prices let them buy more of the asset with the same amount of cash, while gold rallies increase the value of their existing holdings.

Free Silver: See how you can get up to $25,000 in free silver with American Gold & Silver Group

4. Track and review annually

The final step for investors who want to expand their gold holdings is to track and review their progress each year. Investors should monitor how much gold is in their portfolio as a percentage. For instance, if you own $10,000 worth of gold and have a $100,000 portfolio, you have a 10% concentration in gold.

Most experts recommend having no more than 5-10% of your holdings in gold, with rebalancing often a good idea if your gold position exceeds 10% of your overall portfolio holdings.

Volatility Shield: Learn about Newport Gold Group's precious metals price matching

You don’t have to reach that 5% figure right away. Some investors gradually accumulate gold while keeping the rest of their portfolio undisturbed, while others prefer to sell rallying stocks and put the money into precious metals.

It’s important to assess your risk tolerance and financial goals when determining how much gold makes sense for you. Investors with high risk tolerances can still benefit from gold, but these individuals usually gravitate toward high-growth stocks and funds.