Gold has always been a symbol of wealth and power through the ages. Its value as a commodity is well-established throughout history, as well as in legends and myths. Gold’s enduring worth is proof of its stability and attractiveness that makes people from all walks of life drawn to it.
Investors consider gold as one of the safest investments. It can survive economic downturns; if its value depreciates, gold quickly recovers. As an investment, it’s safe, reliable, and serves as an anchor for most investment portfolios. Gold is the go-to asset for investors who gets nervous whenever the market shows instability. In times of inflation, gold is a haven. It retains its value better, compared to other assets backed by currency.
From 2011 to 2021, the price of gold went up by more than 46%. Maybe not as spectacular as Bitcoin’s growth from the same period, but gold’s growth comes without Bitcoin’s heart-pounding, stomach-churning price swings. Gold’s growth may be unexciting, but it’s steady and reliable, which is why conservative money managers recommend gold.
This is not to say that gold isn’t subject to fluctuations; far from it. Gold, however, has always managed to recover—so far. So, the question is, should retirees invest in gold?
With that question, it’s fair to look at the advantages and disadvantages of investing in gold for your retirement funds. Gold is certainly a solid investment, but it may not be for everyone. The points below are designed to help you decide on whether gold is the right investment for you.
Investing In Gold: The Advantages
If you have experience investing in gold in the past, you probably know the benefits that come with buying gold. But will those benefits be the same, now that you’re investing for your retirement? Let’s look at some of the advantages of investing your retirement fund in gold.
- Gold is sound during a crisis.
Anyone involved in finance knows that in times of political turmoil and economic crisis, the price of gold remains rock solid. Sometimes it even rises. It’s no wonder that more than a few investors consider gold as an insurance policy. Peace of mind is one of the benefits retirees can have if they do decide to invest in gold. Find out more about investing in gold at retirementinvestments.com.
- This precious metal can be an effective hedge against inflation.
The price of paper currencies can sink, but gold remains as constant as the North Star, especially in the USA, UK, and India. For retirees with a fixed income, inflation can easily decimate a portfolio, particularly if interest rates are low.
- Gold is tangible.
If you buy gold bullion like gold bars, Krugerrands, or gold coins, you’ll have an asset you can actually see and hold. This is one of the advantages of owning gold. You can take possession of your asset, unlike owning stocks or Bitcoins. You can hold it with your own hands in times of uncertainty and be assured that what you have is tangible proof that you possess something of value.
- The value of gold has grown appreciably.
Gold’s price has made significant gains in the past few years. This is due mainly to stable levels of supply and demand managing to drive up gold’s prices. And these increases have been relatively steady since the last century. Now that the world is facing uncertainties, gold may be in a position to appreciate even more. Your tidy nest egg could gain significantly more with an investment as reliable as gold.
Investing In Gold: The Disadvantages
The advantages cited above might be convincing, but before making any decision, you should also consider some disadvantages that investing in gold can entail. It’s best to make an informed decision especially when it comes to your retirement. Here are a few points against investing in gold:
- There are no dividends or interests.
While it’s true that gold is nice to have in times of crisis compared with paper currencies, you shouldn’t expect to profit from this precious metal. Unless, of course, you take them out and sell them. This could mean you’d always have to study and watch the goings-on in the market so that you’d know the right timing on when to sell. Watching the market for gold prices isn’t exactly how anyone would want to spend their retirement years, wouldn’t they?
- Gold’s role as an inflation hedge can get tenuous.
It’s true that gold is a hedge against inflation, but some market experts maintain that it may not always be the case. Gold, despite its reputation for reliability, can fluctuate, and there have been periods where gold prices became volatile.
- Having a stockpile of gold would take up space as well as money.
Having in your possession an asset like gold can have its advantages. There’s a drawback, though. Foremost is the space where you’re going to store your hoard. There’s your home, of course, but not many advisors would agree to that. You’ll need proper space with effective security to store your valuables. These can be issues for those who want to cut back for retirement. Storing it elsewhere can also bring its own set of problems; for one thing, the gold won’t be accessible to you.
- Volatility can be an issue.
Reputation for reliability notwithstanding, gold, like any other commodity, can be volatile. There have been major price gains for gold in the past, but you should know that there had been big price drops, too. So, if you are hoping for a tranquil retirement fund investment, gold might not be what you’d expect. It’s the market, after all.
Deciding where to put your life saving can be nerve-wracking. It’s your retirement money and you can never be too careful when it comes to your nest egg. However, presented with these pros and cons, one thing is certain: you can always diversify. Sure, invest in gold, but be sure to also invest in other assets, like treasury bonds. Diversification is key. In any case, gold can be a part of your portfolio. If you diversify, you might see significant improvement in your funds in the future.
Gold can be a good investment for retirees, but there’s always a caveat. Market forces can be unpredictable, and no commodities can be 100% foolproof. There will always be a degree of uncertainty. The best bet is to diversify, and don’t put all your eggs in one basket.