Investors in gold have three options: individual equities, bullion, or funds that invest on gold. Funds that invest in gold are known as Gold Mutual Funds.
Gold Mutual Funds investments are handled by experts that take care of the merits of investing in gold, do all of the research that is needed, and monitor the portfolio regularly. Gold Mutual Funds typically invest in businesses of a smaller size and foreign countries. They are riskier than general, diversified funds.
Morningstar, Inc. defines gold mutual funds as the “funds that pursue capital appreciation by investing primarily in equity securities of companies engaged in the mining, distribution, or processing of precious metals.”
With gold being worth more right now than ever before, more and more people are investing in Gold Mutual Funds. When the economy starts looking bad, gold investments go up in value. And, with the economy being such a bad state, the price of gold has gone up by 200% since 2002. Right now would be an excellent time to invest in Gold Mutual Funds.
An investor can earn money from a Gold Mutual Fund by one of three ways.
- Dividend Payments. Dividend payments and interest are two of the ways that your fund can earn income. After deducting expenses and dividends, the balance is distributed among the shareholders.
- Capital Gains Distribution. When the value of what has been invested in increases, a capital gain is earned. After any losses have been subtracted, the remaining balance is distributed among the investors.
- Increased Net Asset Value(NAV). If the market value increases even after deduction of expenses, then the NAV increases along with the share. The higher value of the investment in the fund will show in the higher NAV.
Transactions involving Gold Mutual Funds are very flexible, convenient, and time saving. You can buy and sell Gold Mutual Funds based on the current NAV. The NAV can be calculated by subtracting liabilities from the total value of the assets in the fund.
There are many stocks in a Gold Mutual Fund. Therefore, the value will likely change daily. This means that the NAV will change daily, also. Investors are allowed to open an account with as little as $1000, or you can make an agreement to make $50 to $100 payments into your account every month.
With the economy in such a predicament, go ahead and make yourself a little more money on the side. Invest in a gold mutual fund, consider a gold ETF, or, if you want to keep your investments more physical, go ahead and invest in actual gold coins.