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While inflation showed signs of slowing in recent months, according to the latest report, it was still 1% higher than the Federal Reserve’s target rate of 2 percent. As a result, the Fed kept its benchmark rate locked at a The highest in 22 years. This has, in turn, kept the cost of borrowing high at a time when the price of consumer goods also remains high.
In the current economic climate, many older people are turn into gold to help protect against the impacts of high inflation. But while gold can help seniors protect their wealth while providing other unique benefitsInvesting in gold is not always the right solution. Depending on your situation and investment goals, there are times when it makes sense for seniors to invest in gold —and other times when it might not make much sense.
So when is it invest in gold As a senior, is it a smart move? And when should you avoid doing it? Here’s what you need to know.
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3 times more seniors should invest in gold
Here’s When, According to Experts, You Might Need to Consider investing in gold as a senior.
1. When you want to protect yourself against inflation
Investing in gold as a senior can be a smart move hedge against high inflation.
“Gold is typically a hedge against very high inflation or a major credit event like we saw in 2007 and 2008,” says Doug Carey, a certified financial analyst and president of WealthTrace, a retirement planning software solution.
Seniors who want to protect themselves against the pitfalls of such events might consider adding gold to their portfolio as insurance, Carey says.
Learn more about the benefits of investing in gold online now.
2. When you want to diversify your investment portfolios
Investing in gold can also reduce risk of your wallet, according to Carey.
“Gold generally has a low correlation to other asset classes like stocks and bonds, meaning its price doesn’t typically move in lockstep with traditional financial assets,” Carey says. He believes this diversification [adding some gold to your portfolio] can help reduce overall volatility and losses in times of crisis.
That said, you generally shouldn’t put your entire retirement portfolio in gold.
“I recommend investing no more than 5% for seniors because gold can be risky and does not produce any income,” Carey says.
Rick Miller, a financial planner and investment advisor at Miller Investment Management, agrees.
“As a diversifier from a stock-heavy portfolio, gold has advantages,” Miller says. That’s because gold doesn’t fluctuate like stock markets do. As a result, he believes buying gold can help smooth out the overall return of an investment portfolio.
3. When you want to protect yourself against market declines
Gold and other precious metals can also help protect your portfolio from market declinesexperts say. This in turn could prove useful as a medium of exchange in difficult economic conditions.
If your goal is to protect yourself against market downturns, Miller recommends 1 oz gold bars as an asset to invest in.
“They are small, easy to store and function as a medium of exchange,” Miller says.
According to Miller, these small gold bars are therefore the vehicle of choice for investing in gold for this purpose.
3 Times Seniors Should Not Invest in Gold
While buying gold as a senior can be beneficial, there are times when it’s best to avoid investing in the yellow metal, experts say. These include:
1. When you need cash
While gold is considered a liquid asset In some ways, investing in gold may not be the best option if you are a senior who wants to invest in a highly liquid asset, meaning you want to easily sell your investment for cash.
“Gold is not a liquid asset like cash or some stocks, and converting it quickly to cash could mean getting a lower price than they could get later if they take longer,” Carey says.
That said, there is types of gold assets that offer more liquidity than others. For example, if you are looking for liquidity and want some exposure to gold, you may want to consider buying gold stocksIn general, gold stocks can be more easily converted into cash, especially compared to some types of physical gold.
2. When you have a small wallet
Investing in gold only makes sense for seniors if you have a large investment portfolio, some experts say.
“Having a position in gold is probably best suited for investors with a reasonably substantial portfolio, because gold has not matched stock indices in terms of growth over time,” Miller says.
3. When you need a regular income
When you need income from your investmentsThere may be better investment options than gold, experts say.
“Unlike dividend-paying stocks or interest-bearing bonds, gold does not produce regular income,” Carey explains.
Benjamin Hooper, certified financial planner, founder and wealth manager at Comal Wealth Management, has a similar view.
“Although gold is traditionally viewed as a hedge against inflation, its effectiveness is often overestimated compared to stocks. Unlike stocks, which benefit from economic growth and innovation, gold does not generate income or dividends,” Hooper explains.
Gold prices can also be volatileespecially in the short term, Hooper says, because they can be influenced by factors unrelated to inflation. This in turn could pose a risk to older people who need reliable income during retirement.
The essentials
Investing in gold as a senior can be a smart move if you want to hedge against inflation or diversify your portfolio to reduce your risk, experts say. If you need regular income during retirement, you may want to consider investing more in other assets, such as dividend-paying stocks or bonds.
“Keep in mind that gold doesn’t perform as well as the stock market, so understand your goals and act accordingly,” Miller says.
If you need help determining whether adding a small percentage of gold in your portfolio This makes sense, it might be beneficial for you to consult a financial professional who can make recommendations based on your complete financial situation.
