When it comes to investing, there are many considerations to take into account. Your short- and long-term goals are one of them. So is your financial health and your risk tolerance. For younger investors, the latter two may be flexible, but for seniors, it’s crucial to get them right. A wrong investment for seniors, many of whom are reliant upon retirement savings and Social Security, could be devastating. That’s why it’s so important to do your research and truly understand the cost-benefit analysis of an investment before getting too heavily involved.
This is particularly true for gold investing. Long considered a reliable investment by many, gold has taken on new appeal in recent months, as many have turned to it to help hedge against the pain felt by inflation and higher interest rates. But like any investment, there are some steps to take — and others to avoid — in order to get the greatest return.
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3 things seniors should do when investing in gold
Here are three smart things seniors should do when investing in gold.
Understand what they’re trying to accomplish
What is the point of your gold investment? This is a critical question to get right. If it’s to help diversify your portfolio and hedge against inflation, then that’s great. That’s exactly what gold can assist with.
But if it’s to generate some quick income, then investors should reconsider their goals. Gold can surely generate income. But that would take months (if not years) to be anything substantial.
Instead, a gold investment should be made with an eye toward diversification and a way to protect your money when other investments like stocks and bonds do poorly — or when inflation (like it currently has been doing) erodes the purchasing power of the dollar.
Invest in the right amount
The right amount to invest in gold is a relative one, and it may be less than some seniors imagined. In fact, most experts recommend limiting the gold investing portion of your portfolio to 10% or less. Depending on your age, liquidity and the goals mentioned above, however, you may want to be closer to that 10% or on the lower end of the spectrum. Speak to a financial advisor and/or a gold investment company to determine the right amount for you.
Explore all options
While gold bars and coins are the shiny option you often see advertised, they’re not the only way to invest in gold, nor are they necessarily the best. Just like the gold investing goals (and the amount you invest in the precious metal) are personal, so are the ways to do so.
Accordingly, investors should explore all of their gold options before getting started. This includes reading up on the pros and cons of gold IRAs, gold ETFs, gold futures and gold stocks. You may want to split up your gold investments between a few of these, or you may best served by focusing just on one. But you won’t know which is best for you until you’ve explored them all.
The bottom line
All investments should be approached strategically and smartly. But seniors should be extra judicious about where they invest their money — and how much they invest. While gold can be a helpful way to protect their funds, they should understand what they’re trying to accomplish before getting started. They should also be sure to invest in the right amount to meet that goal, and they should explore all of the gold investing options available that can help get them there.