First Time Gold Buyers Over 50: What You Should Know When Investing
It’s never too late to consolidate your retirement savings, and that includes adding gold to your investment portfolio.
Exposure to precious metals can increase your diversification, and doing so does not require buying physical assets. If you’re 50, a small investment in a gold exchange-traded fund (ETF) can make sense — as long as you know the risks. Here’s what you should know before investing in gold if you’re over 50.
Gold buying mistakes to avoid
Although investing in gold can provide portfolio diversification and a hedge against inflation, there are mistakes you can make that increase your portfolio’s risk. That can be very stressful for people in or near retirement.
One mistake is buying gold at the expense of other assets. Although gold comes with benefits, financial advisors often recommend that it should not make up more than 5-10% of your overall portfolio. Traditional assets such as stocks and bonds also have many qualities that can help you build retirement wealth.
Another mistake is not considering the cost of owning physical gold, including storage and insurance. If you choose to buy physical gold, you should also verify its authenticity.
And as with all investments, don’t let emotions guide your investing. The price of gold can fluctuate in the short term, but you should avoid panic selling when the price falls (or buying aggressively when it rises).
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How to get gold exposure
If you don’t buy physical gold and instead invest in ETFs, dollar cost balancing will allow you to build your gold positions over time and capitalize on any dips. This strategy involves investing a fixed amount of money at regular intervals.
When it comes to portfolio allocation, you don’t need to rush to the 5-10% allocation right away, and not all investors want to be on that list. You can start with small holdings that bring you closer to 1% to 2% of your portfolio.
Investors can buy gold ETFs as an easy way to gain exposure. However, there are also well-known coin dealers and online platforms that allow people to accumulate physical gold.
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How to add gold to an existing portfolio
You don’t have to lift your entire portfolio just to put gold first. Precious metals work well with stocks, bonds and other assets to create a completely diversified portfolio. Older investors tend to be less risk averse as retirement approaches, but it’s still best to have a mix of assets. A portfolio of stocks, bonds, cash and gold can reduce volatility while providing cash flow and growth potential.
Each property has strengths and weaknesses. Although gold is an important inflation hedge and safe-haven asset, it does not provide cash flow. Bonds and dividend stocks can give you the cash you need, while your gold position gives you an extra layer of protection against market uncertainty. And just remember: You haven’t missed the boat if you just started with gold in 50 years.
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