Can seniors earn income by investing in gold?
An announcement last month that the Social Security administration was raising the cost-of-living adjustment for recipients was welcome news for many. While the average retirement benefit will only increase by around $50 in January, every extra dollar helps. This is especially true for seniors and older adults, many of whom may be reliant upon Social Security and retirement savings. But are there other income sources that seniors can benefit from, too?
In 2023, many have turned to gold investing. Investing in the precious yellow metal hit an 11-year high in September. But is it worth investing in for seniors and can they earn income if they do so? That's what we'll break down below.
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Can seniors earn income by investing in gold?
The short answer to this question is yes, seniors — and all other investors — can potentially earn income by investing in gold. That said, it will take time to earn this income and the returns are likely to be minimal compared to other income-earning activities.
So, if you purchased gold in November 2022, you would have paid around $1,600 per ounce. But that same gold investment now is worth just under $2,000 per ounce. So you would have made a profit over 12 months, but that profit would have been just a few hundred bucks. If that's the goal, you may be better off simply opening a high-yield savings or certificate of deposit (CD) account.
That all being said, gold investing still has major benefits, even for seniors and especially in today's economic climate.
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Gold investing benefits seniors should know
While a gold investment can theoretically earn some marginal income, the true benefits the shiny metal can provide reside elsewhere. Specifically, gold can also:
- Hedge against inflation: One of the major reasons why gold interest has taken off this year? That's due to its ability to buffer against inflation. Gold tends to hold its value and will often even rise in price when inflation is elevated and interest rates are high. Considering the uneven performance of other assets during similar circumstances, then, it's understandable why so many have turned to gold for help.
- Diversify your portfolio: Gold can also successfully diversify your portfolio. This is particularly helpful when other assets perform in a volatile fashion. While gold may not rise dramatically in price during these times, it won't necessarily tumble downward in the same way other assets might. That said, to successfully diversify your portfolio with gold you'll generally want to limit your investment to 10% or less of your overall portfolio.
- Provide a tangible asset: While stocks and bonds can be great they don't offer the same physical benefits gold can. An investment in gold bars and coins, for example, provides investors with some tangible benefits. They can hold it in their hands, store it at home or sell it easily. While this benefit may not be appealing to everyone, for certain investors it can be a major incentive.
The bottom line
Seniors looking for alternative income-producing investments may want to turn to gold. While not the primary benefit the investment provides, it can still grow in value over time. But it will also come with some other, major benefits, due to the hedge it provides against inflation and its ability to diversify your wider portfolio. Plus, a gold investment in a physical form is tangible; it's easy to buy, store and sell, unlike many other assets. For all these reasons and more an investment in gold for seniors and investors of all ages makes sense now.
