Gold and Silver Investing Vs Mutual Funds

Gold Stocks and Silver Stocks often present a far more profitable option than the traditional Mutual Fund. Here are some of the main reasons for this…

First of all, Mutual Funds often charge some form of M.E.R. – a.k.a. Management Expense Ratio. This is an amount that is charged to you whether your Mutual Fund makes money or not. If you win on the market, your Mutual Fund and it’s salespeople do too. If you lose in the market, guess what – your Mutual Fund and it’s representative still get paid! Obviously losing money to this M.E.R. impacts your profits significantly.

Secondly Mutual Funds are designed to be a “zero-sum” game. The goal is that the losses in some holdings are neutralized by the success of others. If that is the result, then aren’t you just back at zero?

Thirdly, Gold Stocks and Silver Stocks trade in a commodity that is rooted in what is known as “intrinsic value”. This means that there is value built-in to Gold and Silver Stocks. For example, there is a real need and demand for Silver – for mobile phones, medical applications, and jewelery – whether it is expensive or not. Just like housing and real estate in general: whether it is expensive or affordable, people need it to continue their day-to-day lives. This means that the stock of companies that work in the exploration, refining, and mining of Gold and Silver will have this kind of built-in demand.

Fourthly, there are also some very speculative gold and silver stocks that are both high risk and high reward. This volatility isn’t welcome by some investors. When I think of the stock market crashes of 2000 and 2008, I am reminded that no stock or mutual fund is totally protected from market swings. That the same due diligence is required either way.

Warren Buffett, the world-renowned billionaire genius investor, has often said that Wall Street is the only place in the world where people arrive in a Rolls Royce to take advice from people who arrive on the subway. I believe that looking at the source of the advice is critical. Are you taking advice about the stock market from someone who has arrived to work in a Rolls Royce, or on the Subway? Do they “have” what you want to achieve, or are they simply a salesperson that has a special title to make you think they are qualified to give you advice?

Mutual Funds were designed for people that don’t want to do too much thinking about their investments. If you want what the majority has, they do what the majority has done. To get above-average results it is usually required to do some extra work and research. Carefully consider what you’re looking to achieve and choose your advice accordingly.

Source by Graham Goodkey

Gold and Silver Investing Vs Mutual Funds