The Hidden Side of Being Gold in Your 60s
The price of gold increases by 65% ​​by 2025. During such a boom, it’s easy to wish you had bought the precious metal sooner.
But owning gold can add significant returns to your portfolio even when the price doesn’t rise, especially for investors nearing retirement. Here’s what you should know about the hidden benefits of owning gold.
Benefits of owning gold in your 60s
Young investors may choose riskier investments such as stocks, as they have time to wait for market downturns and will not need to sell assets when prices are low to cover their retirement expenses. But if you’re in your 60s and about to retire when your portfolio drops, you don’t have much time to recover. That market decline can lead to emotional trading decisions, such as keeping money on the side or buying high and selling low.
Owning gold can help reduce this risk. Gold is often considered a safe haven during market turmoil, as it is a reliable store of value and often behaves differently from stocks. Research from State Street Investment Management found that gold provides competitive returns while having a lower correlation to traditional financial assets such as stocks and bonds. Researchers have found that gold tends to outperform US equities during market downturns. For example, gold gained 12% during the 2008 financial crisis, while US stocks were down 47.3%.
Gold can also act as an inflation hedge. Inflation reduces your purchasing power, and can eat into your gains from the stock market. But gold tends to hold its value even during periods of inflation, and can even see price increases as investors flee the stock market and move into gold.
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How to buy gold
As with any asset, you don’t want to add too much gold to your portfolio. However, gaining exposure to precious metals can allow for more diversification. Most experts suggest that you have no more than 5% to 10% of your portfolio allocated to gold. You can invest money over time — a strategy called dollar-cost averaging — to reach that dividend.
Buying physical gold is an option, although it can be complicated and requires you to consider storage and insurance costs. Gold exchange-traded funds (ETFs) are another way to gain exposure, and buying shares of these funds can be as easy as buying stocks and bonds.
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Focus on the long term
Flat gold prices are not a bad thing. Instead, see it as an opportunity to accumulate gold to prepare for the next meeting.
But remember that gold prices can fluctuate in the short term. If you are considering gold, you should not consider it as a short-term investment. Instead, check if it makes sense for your long-term investment plan.
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