You don’t have to be a pirate to make gold part of your retirement savings. Gold has evolved considerably in the past few decades, from the stuff of buried treasure to a modern investment vehicle that almost every type of investor should own in one way or another. Investors are finally seeing gold as a mature way to avoid risks, protect their wealth, and prepare for a rainy day. If you’re looking for a treasure map to investing in 2019, gold marks the spot!
Why Is Gold a Good Investment?
Market volatility is the biggest reason bullion has gained in popularity over recent decades. Major stock market crises throughout the ’90s an 2000s have sent investors looking for new ways to diversify their portfolios. And of all commodities, gold has one of the closest inverse relationships to indexes like the S&P 500. As stocks go down, precious metals go up.
Gold is increasingly seen as life boat for your savings, appreciating in prices when stocks are doing poorly. The common wisdom seems to be that you should always own some and increase your position during the early signs of volatility. Bullion is more accessible than real estate and harder to inflate than currencies (which can experience debasement when governments borrow heavily to dig out of recessions).
How Much Gold Should You Own?
This depends on a lot of factors, but the most important reasons are personal. Experts suggest anywhere from between 5 to 10% of your portfolio should be in precious metals in general. CNN Business has said that silver could be the better investment, with silver prices down 25% over the last 5 years and silver significantly undervalued.
Gold is part of an investment strategy that can handle a pullback in stocks. This becomes more important as you get older or less risk tolerant. If retirement is your investment goal, your risk tolerance tracks closely to your age, though even younger investors who are saving to buy a house may want to consider a bigger position in safe havens.
Gold helps make sure that your money is ready when you’re ready to spend it. You may not have 5 years for your savings to recover after a major stock market crash. However, it doesn’t generate interest or grow as quickly as stocks. Strike balance that fits your investment needs.
Why You Should Own Physical Gold
Paper investments are easier to trade than gold bars and coins, but the risks are minimal. Any time you own paper gold such as mining stocks or ETFs, you’re putting your faith in someone else to responsibly manage that money. And as the world finds out every time there’s a market crash, there is no shortage of fraudulent management teams in stocks or publicly-traded companies. As an alternative, fully insured, allocated storage limits theft and fire risks. There are many benefits to owning gold bullion over paper gold; click here to learn more.
Gold belongs in every portfolio. If you still think of it as the kind of thing that only belongs in a pirate’s lost treasure, it’s time to update your perspective. Everyone should own it.
Nicola Holder