BUYING gold isn’t just splashing out on fancy jewellery – you can invest and make some serious cash.
The price of precious metal has skyrocketed by 50% over the past 12 months. We reveal three ways you can get involved, so you can join the gold rush and turn £10 a month into £8,465.
Gold has soared for a number of reasons.
It is still seen as a safe bet at times of uncertainty, and people tend to invest when they are worried about interest rates, the economy, or other factors, which pushes the price up.
These have all been concerns over the past year, as well as President Trump’s trade tariffs, conflicts in the Middle East and Russia, and worries about an AI stock market “bubble”.
According to analysis by the wealth management firm Bentley Reid, the gold price has gone up by an average of 13% a year for the past 10 years.
Last year alone, it rocketed by over 50% so if you’d invested £1,000 then, you would now have about £1,598 – a profit of £598.
But if you invest for longer, the returns are even better.
If you had invested £10 a month into gold over the past 10 years, you would have invested a total of £1,200 and seen your money grow to £2,480, according to BullionVault.
And if you had invested £10 a month over 20 years, your investment would have grown to £8,465.
Want to start investing? Here’s how to do it.
I made £650 after one month by investing in gold
KATE Seow, 41, runs her own business Kate Seow Jewellery – and first found out about the soaring price of gold thanks to her business contacts.
She says: “I buy gold in sheets or wire form for my work and I kept getting emails from my bullion providers about putting their prices up. Investing in gold felt like a good way to offset my rising business costs.”
Kate, who lives in Yarm, opened a stocks and shares Isa and, using money from inheritance, invested the maximum £20,000 that you are able to put into these accounts each tax year.
She put £5,000 into the iShares Physical Gold ETC in August. Within one month it had gone up 13% and she had made a £650 profit.
She decided to sell her holding.
“I started reading about how the price could drop and I was worried about losing a lot of money,” says Kate.
“In hindsight, it was probably a rookie error but I needed to get used to that volatility.”
Kate reinvested £3,000 in the fund at the start of November after the gold price had dipped and this time she plans to stay invested for the long-term.
When the new tax year begins in April, she plans to set up a direct debit to invest a regular amount each month so she can continue to grow her money.
“They say you should invest in things you understand and because I work with gold, I feel like I really understand it. Investing in it felt like a no-brainer,” says Kate.
I made £650 after one month by investing in gold
KATE Seow, 41, runs her own business Kate Seow Jewellery – and first found out about the soaring price of gold thanks to her business contacts.
She says: “I buy gold in sheets or wire form for my work and I kept getting emails from my bullion providers about putting their prices up. Investing in gold felt like a good way to offset my rising business costs.”
Kate, who lives in Yarm, opened a stocks and shares Isa and, using money from inheritance, invested the maximum £20,000 that you are able to put into these accounts each tax year.
She put £5,000 into the iShares Physical Gold ETC in August. Within one month it had gone up 13% and she had made a £650 profit.
She decided to sell her holding.
“I started reading about how the price could drop and I was worried about losing a lot of money,” says Kate.
“In hindsight, it was probably a rookie error but I needed to get used to that volatility.”
Kate reinvested £3,000 in the fund at the start of November after the gold price had dipped and this time she plans to stay invested for the long-term.
When the new tax year begins in April, she plans to set up a direct debit to invest a regular amount each month so she can continue to grow her money.
“They say you should invest in things you understand and because I work with gold, I feel like I really understand it. Investing in it felt like a no-brainer,” says Kate.
Where to start:
There are different ways to invest in gold – from literally buying a gold bar to investing in a ‘fund’, which is where an expert investor picks gold mining companies to invest in for you.
We weigh up which method is easiest and cheapest.
Buy a gold bar – but beware of tax trap
Buying a gold bar sounds like something out of a Harry Potter movie – but it’s actually a legitimate way of investing.
If you decide to invest in physical gold (known as a bullion), you can buy it through the Royal Mint or from registered gold dealers like BullionVault and Bullion by Post.
The drawback is that you’ll need a wedge of cash upfront to start investing – whereas if you wanted to invest in the stock market, for example, you only need £1 to get started.
A bullion coin costs £133 for the smallest size (1g) from The Royal Mint.
There’s also the issue of how to keep your investment safe.
You will need to have somewhere at home to store it securely.
Your gold is unlikely to be covered under a standard home insurance policy you can buy from the high street.
You will need specialist insurance, the cost for which will depend on a number of factors including where you live, and the size of your gold bar.
If you don’t have a secure place, you can pay for it to be stored in a vault by a company.
The Royal Mint, for example, charges 2% of the value of your gold plus VAT – so if you had a gold bar worth £300, you could expect to pay £7.20 a year in charges.
There’s also the problem of if you wanted to sell your gold quickly to access your cash.
This is much slower than selling an investment in a fund, so if you want quick access to your cash, this may not be the right choice.
Plus, you may have to factor in paying Capital Gains Tax – which is charged on the profit you make when you sell something that has increased in value – if you sell your gold.
Basic rate taxpayers are charged 18%, and higher rate taxpayers are charged 24%.
Be aware of risk – but play the long game
IF you have enough cash savings to invest, then the returns are impressive.
On average, since 1899 the stock market has delivered an average return of 4.8% a year, compared to an average of 0.5% if you kept your money in cash savings, according to Barclays.
That means if you had put £100 in the stock market in 1899 it would be worth £31,888 in real terms today, while the same amount put in cash would be worth just £190.
But as we have seen recently, the stock market can also fall.
The American stock market saw its biggest drop since the start of the Covid pandemic after US President Donald Trump announced plans to introduce punitive tariffs on goods imported to the US from other countries.
The UK’s own stock market, the FTSE 100, fell by more than 10 per cent after the news.
This is only actually a problem if you need to access your money but if you’ve got a long-term savings goal then the market will usually bounce back.
Ups and downs in the market are called “volatility”, but the idea is that over the long-term you can ride out these bumps and your money will grow, although it can feel uncomfortable at the time.
That means it is crucial that anyone considering investing is willing to tie their money up for a minimum of five years, as this gives your investments time to recover from any dips.
You do need to be prepared to lose it all.
Gold “on paper” – cheapest way to buy
If you don’t have enough upfront cash to invest in gold and don’t want the worry of storing it safely, consider investing in gold “on paper”.
This is when you can invest in gold without having to hold it yourself.
Experts say the cheapest and easiest way to do this is to invest in an exchange-traded commodity (ETC).
This sounds very jargon-y but don’t panic – this is simply a fund that’s already set up for you that tracks the gold price.
However, there are fees to consider before investing in an ETC.
Many platforms will charge you fees to hold your investments.
For example, a popular ETC is the iShares Physical Gold ETC.
This comes with an annual fee of 0.12%.
This has returned 47.2% over one year, which means a £1,000 investment would have grown to £1,427 after fees.
How to set up a stocks and shares Isa
A STOCKS and shares Isa is a great way of setting yourself up to invest if you are a beginner.
You can invest up to £20,000 a year this way and any profits you make will be tax-free.
You can start with as little as £1 – but the returns you make will depend on how much you invest and where.
Many beginners choose to invest in “funds”, which are investments already picked for you by experts.
You can pick “cautious” funds, which are lower risk as they invest a smaller proportion in the stock market and more in government bond and gold – which are considered a “safer” place for your money.
While “adventurous” funds have more in the stock market, which can mean greater returns but also more risk.
Many banks, or investment platforms like AJ Bell or Hargreaves Lansdown, let you set up a stocks and shares Isa.
When deciding, it is important to look at the fees and the minimum amount you need to invest.
Check that the company offers the types of investment you want, see if you like the look and feel of the app, and read reviews from other users.
Factor in fees too.
NatWest charges a fee of 0.55% of the value of your investment.
That works out at 55p for every £100 of your investments.
In comparison, Barclays charges a 0.25% fee, which works out at 25p for every £100 you invest.
Before you start investing, experts recommend you having three to six months worth of emergency savings built up to cover your bills first.
Invest in gold companies – but beware of ups and downs
Another option is to invest in gold companies. Similarly to investing in gold “on paper”, you’ll need a stocks and shares ISA to do this.
You can pick a ready-made fund that invests in the shares of companies involved in gold mining.
However, be warned – these funds are considered to be volatile as, if the gold price plummets, so do the profits of the companies that mine it.
The Ninety One Global Gold fund is a popular fund you could invest in.
It invests in firms across Canada, Australia and the US, among other countries.
Its top investments include Colorado-based gold mining company Newmont, K92, a gold mining firm in Papua New Guinea, and Canada-based Pan American Silver.
The fund is up 94.6% over one year – which means a £1,000 investment would have grown to £1,946 after annual charges of 0.84%.
Have you missed the gold rush?
As gold has soared to record highs, many will be wondering whether now is a good time to invest, or whether it’s too late.
If you buy when the price is at a high and then it crashes, you’ve made a loss.
Some experts are concerned that the price of gold has climbed too fast – and is now starting to dip.
In the past couple of weeks, the price has fallen by about 10% from its peak of £3,326 per ounce to a current price of about £3,147.
This is partly because investors who have done well from its recent rise are banking their profits.
Bola Onifade, from JPMorgan Personal Investing, says: “History shows that after periods of strong performance, gold can pull back and we have seen this to some extent recently.
“Long-term demand for gold is still strong, but this should be a cautionary reminder for investors that gold should only be part of their portfolio.”
Experts typically advise having a maximum of 5-10% of your money invested in gold.
Despite a recent dip, other experts expect the price to keep rising.
Adrian Ash, founder of BullionVault, said some are predicting it to reach £3,808 per ounce within a year – but it could be a bumpy ride to get there, he warns.
Some predict that gold could fall a further 10% to £2,665 in the short-term (around three to six months) before it starts to rise again.
For those who want to invest in gold, it may be tempting to wait until it has fallen before you take the leap.
However, experts say it is almost impossible to predict exactly when the price will rise or fall so investing small, regular amounts over the long-term is usually a better strategy.
It is important to recognise the downsides of investing in gold too.
The price can swing sharply up and down very quickly, which can make it a volatile asset to invest in – so you need to be comfortable with these swings, and only invest money you can afford to lose.
The only way to profit from gold is to sell at a higher price than you bought at.
Top three investing tips for beginners
BRIAN Byrnes, head of personal finance at Moneybox, shares his top tips…
Set a goal: Whether it’s buying a home, retiring early or simply building your wealth – set a target and a timeline for how long you expect to take to reach your goal. Try to dedicate 30 minutes a week to learning about investing topics like stock market trends and compound interest as this will help you feel more confident.
Keep costs – and risks – low: Consider lower-risk options like index funds, which track a certain stock market like the FTSE 100 or S&P 500. These are often cheaper than other investments and are diversified because they invest in hundreds of companies, which helps to reduce your risk. Investing small amounts every month will help you to stay consistent.
Use an ISA: Every adult can save £20,000 a year into an ISA and all the gains you make are completely tax-free. If you are saving for your first home, consider a Lifetime ISA – you can save up to £4,000 a year in these accounts and get a 25% bonus from the government. Not having to pay tax on your gains helps to accelerate your growth.
