8 Myths About Buying Gold That Keep Investors From Getting Started
Myths can prevent people from taking actions that will benefit them in the long run. For example, the fear of losing money, missing out on opportunities and the difficulty of investing in gold can prevent people from acquiring the precious metal.
But dispelling those myths can help you feel more confident about adding gold to your portfolio — and benefiting from its properties.
Myths about who should invest in gold
Adding gold to an investment portfolio may not make sense for everyone, but there are some myths that suggest gold belongs to a small subset of investors. These misconceptions may prevent investors from taking advantage of an opportunity that could improve their portfolio.
- Gold is for the richest people: You don’t have to be rich to have gold. Investors can buy shares in a gold exchange-traded fund (ETF) and gain exposure to the asset without owning and storing physical gold.
- Just gold for doomsday preppers: Gold is considered a traditional safe haven – and that can work in many situations, such as when the stock market is shaken. It has many advantages, including acting as a hedge against inflation.
- Gold is only for retired people: Young investors can also benefit from gold if they want to diversify their portfolio with non-stock assets. This level of portfolio diversification can minimize losses during economic downturns. Young investors can gradually increase their gold allocation as they get older and reduce risk, but that doesn’t mean gold is only for retirees.
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Myths about security and returns
While the first group of myths can discourage investors from investing in gold, the following group of misconceptions can cause unrealistic expectations that leave novice investors unhappy. Having a more rational understanding of how gold works can help investors set reasonable expectations and use the asset more productively in their long-term plans.
- The price of gold is always rising: While the price of gold can have value during recessions and other economic cycles that reflect falling stock prices, the price of the precious metal does not always rise. Gold has endured flat years, down cycles and sluggish periods. It’s not guaranteed to get value each year, but it can reduce risk in a heavy portfolio.
- Gold is guaranteed to protect you: Gold can lose value like other assets. The price of gold tends to fall during economic cycles with high interest rates, as high yields make bonds look more attractive.
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Myths about how hard it is to buy and keep
The final collection of myths revolves around gaining access to gold. Knowing how easy it is to get exposure to gold and the different options you have makes investing in gold feel more accessible.
- You need a vault at home: Gold investors do not need vaults at home. But you should choose a safe place. Some gold investors keep the gold in a local bank safe deposit box and have gold insurance in case anything happens.
- It is very difficult to own: You can start with a gold ETF. These funds are very friendly and work similarly to stock ETFs.
- You can’t put gold into retirement accounts: Investors can get a gold retirement account (IRA) and deposit money into that account. But keep in mind that these IRAs tend to have higher fees than traditional IRAs, and stricter rules from the IRS.
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