First‑Time Gold Buyers Over 50: What to Know Before Investing
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It’s never too late to bulk up your retirement savings, and that includes adding gold to your investment portfolio.
Getting exposure to precious metals can increase your diversification, and doing so doesn't require buying physical assets. If you’re in your 50s, small investments in a gold exchange-traded fund (ETF) can make sense — as long as you know the risks. Here’s what to know before investing in gold if you’re over age 50.
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Gold-buying mistakes to avoid
While gold investing can offer portfolio diversification and an inflation hedge, there are mistakes you can make that increase your portfolio’s risk. That can be especially stressful for people in or nearing retirement.
One error is aggressively buying gold at the expense of other assets. While gold comes with benefits, financial advisors tend to recommend it not make up more than 5-10% of your overall portfolio. Traditional assets like stocks and bonds also have many attributes that can help you build wealth for retirement.
Another mistake is not considering the cost of owning physical gold, including for storage and insurance. If you do opt to buy physical gold, you should also verify its authenticity.
And as with all investments, don’t let emotions guide your investing. Gold’s price can be volatile in the short term, but you should avoid panic selling when the price drops (or aggressively buying when it rises).
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How to get gold exposure
If you’re not buying physical gold and instead investing via ETFs, dollar-cost averaging will let you build your gold positions over time and capitalize on any dips. This strategy involves investing a set amount of money at regular intervals.
When it comes to portfolio allocation, you don’t have to rush to 5-10% allocation right away, and not every investor wants to be in that range. You can start with small allocations that get you closer to 1% to 2% of your portfolio.
Investors can buy gold ETFs for a simple way to get exposure. However, there are also recognized bullion dealers and online platforms that let people accumulate physical gold.
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How to fit gold into an existing portfolio
You shouldn’t upend your entire portfolio just to prioritize gold. Precious metals work well with stocks, bonds and other assets in creating a fully diversified portfolio. Older investors tend to become more risk-averse as retirement gets closer, but it’s still best to have a mix of assets. A portfolio with stocks, bonds, cash and gold can reduce volatility while providing cash flow and growth potential.
Each asset has strengths and weaknesses. Although gold is a valuable inflation hedge and a safe haven asset, it does not provide cash flow. Bonds and dividend stocks can provide the cash you need, while your gold position offers an extra layer of protection from market uncertainty. And just remember: You haven’t missed the boat if you are just getting started with gold in your 50s.
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