Gold is one of the most traditional forms of investment, so much so that our entire modern system of currency was once built on it. As a limited resource, the value of gold cannot be understated. Not only as a necessary component of modern electronics, but also for a means of securing your future.
The precious metal is often regarded as a haven for investments. Perhaps not making the biggest returns but nevertheless commanding a price that is generally resistant to fluctuations in the global economy.
With that in mind, how does one start to invest in gold?
What is investing in gold?
Just like any other investment, the ultimate goal is to increase your personal value.
Traditionally, this was done with jewelry or coins to be kept at home (or sometimes in a safe deposit box). Modern incarnations include having financial institutions handle all physical aspects of the investment; meaning that the owner of the gold may never actually see any of it.
In either case, the idea is that this gold investment can be converted back into cash at a later time should the need arise.
Some modern gold investments don’t even involve directly investing in the gold itself. Instead offering options like ETFs, the futures market, mutual funds, and even stocks in mining companies.
How to get started
That depends on how you want to invest in gold. The simplest way would be to just go down to the nearest jewelry store and buy something. However, this also has the smallest returns. Due to the fact that gold bought this way immediately depreciates On the whole, gold jewelry is best bought for emergency savings instead of wealth generation.
Alternatively, you can invest in gold bullion; which is basically buying pure gold that has been minted into bars or coins or open a gold investment account with a broker or financial institution. Bank Muamalat Malaysia Berhad offers both options through its Muamalat Gold-i Physical and Muamalat Gold-i Account products.
When doing so, it is important that you know what form your gold bullion investment will take. Some accounts work with physical gold, meaning that they will purchase and store the physical gold that you own. In this case you will be able to literally point at the gold that you own.
Often, the broker may also inform you about the origin of the gold bullion. Such as where it was minted and the gold purity content. It should be noted that no bullion will ever be 100% gold as impurities are impossible to completely eliminate. An example of the purest gold comes from the Perth Mint, which regularly produces bullion with a 99.99% purity.
If you are particular to Shariah compliant gold in account form, it is important to note that many conventional banks offer gold account purchase without the backing of physical gold. In essence it is an accounting entry within your Gold Account passbook. Bank Muamalat, however, offers gold in account form which is backed by physical gold at the point of sale which fulfills its strict shariah requirements.
It is important to transact with a reputable organisation as many customers could be at risk of unscrupulous brokers who could sell more gold than they actually have.
How much do you need to start?
Investing in gold is not nearly as expensive as people imagine. Jewelry certainly has a high entry bar but starting an investment account with a financial institution is not. Depending on where you’re looking, your minimum investment could be as little as RM10!
This generally buys you a very, very small amount of gold. But it’s still gold, and it’s yours.
How much you want to invest is completely up to you. For the most part, investors use gold as a monetary safe haven. It’s not necessarily going to make a huge profit, but the price of gold is stable enough to provide you with a backup plan in case your other investments don’t work out.
How do you cash out?
For the most part, cashing out of a gold investment involves selling your gold to a willing buyer. Although this might only be an interest in a share of gold, but it works the same way.
Those working through brokers or financial institutions usually have a preset procedure for converting their investment into cash. These institutions will have a published buying rate for gold, making it easy to calculate just how much your investment is currently worth. This is also helpful even if you are not looking to sell your gold.
Bank Muamalat Gold-i Account
The quickest and most budget friendly way for investing in gold comes from Bank Muamalat. The Muamalat Gold-i Account offers a minimum investment of only RM10, providing an opportunity for even the most cash strapped individuals to begin learning how to invest. Plus, Bank Muamalat does not charge the customer any storage fees.
The gold comes from the internationally recognised Perth Mint and comes with 99.99% purity.
It is also accredited by the London Bullion Market Association, allowing it to be traded at face value without the need for additional verification. In the event of an emergency, this gold can immediately be pawned through the Bank Muamalat Ar Rahnu financing scheme to obtain short term cash without having to sell your gold.
This arrangement is all done in compliance with Islamic principles, allowing Muslims to invest with the knowledge that their wealth is fully shariah compliant.
Now is also an excellent time to get involved in gold investments with Bank Muamalat as it is currently running its “Zam-Zam Alakazam” campaign from 1st October to 31st December 2019 which features cash back and monthly lucky draws, culminating in a Grand Lucky Draw at the end of the campaign. The cash back feature comprises a staggered discount up to RM3 and RM5 for regular and premier accounts respectively.
Customers just need to purchase a minimum 10g to be eligible for the lucky draws and 50g to become eligible for the cash back promotion. Incidentally, the gold doesn’t need to be purchased in a single receipt either and can be accumulated within each month. For more information on Muamalat Gold-i products and campaigns, call 1-300 88 8787 or visit www.muamalat.com.my.
Gold is one of the oldest investments in the world and is generally considered a safe decision for parking your funds. You might not increase your wealth due to market fluctuations, but you are not likely to lose anything either.
More importantly, there is a physical commodity that is ultimately yours to keep, which is more than can be said for investments like shares or unit trust. That alone makes this an attractive option for investors.
