4 expert-backed gold investing tips all seniors should know

Over the last few years, persistent inflation has caused the price of everything from homes to food to increase drastically. This, in turn, has put a strain on many households' budgets, as these higher costs can have a big impact on how far your budget will stretch.

That's one reason why some seniors and older adults may be thinking about investing in gold. After all, gold can act as both a safe-haven asset and a hedge against inflation, both of which are important benefits in today's economic climate. And, the price of gold also hit a new record high recently, climbing to $2,472.46 per ounce, helping to stir up even more interest from investors. 

While gold's value has somewhat moderated in the time since — the price of gold is $2,421.42 per ounce as of July 31, 2024 — it remains high compared to last year's prices. So, many seniors may be wondering whether to buy gold now to take advantage of what this type of investing can offer. Before you add gold to your retirement plans, though, it's important to consider these expert-backed tips.

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4 expert-backed gold investing tips all seniors should know

If you want to become a successful gold investor as a senior, here's what to focus on, according to the experts we interviewed.

Purchase gold from a reputable dealer 

One major factor to consider is the need to research any company you're considering before buying gold. Scams can happen when buying gold — and counterfeit gold products can be an issue — so it's important to make sure that you're buying it from a reputable gold dealer.

Peter Thomas, chairman at precious metals dealer Ausecure, says seniors should look to buy from a well-established dealer that has been in business for at least 10 years. Choosing a firm that has been in business this long increases your chances of successfully receiving [authentic] yellow metal, Thomas says.

Another reason to do your research, says Hanna Horvath, a certified financial planner, is that there are many scams around investing in gold. 

"Seniors should be cautious — especially if someone is promising unrealistic returns," Horvath says. 

After all, unrealistic promises could be a sign that a gold investment opportunity is a scam.

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Limit gold to 10% or less of your portfolio's value

While investing in gold as a senior can be beneficial as it can provide a hedge against inflation and help diversify your portfolio, experts say you should only invest a small percentage of your portfolio in this asset. That's because other types of investment assets can provide more consistent income for retirement, especially compared to gold.

Horvath recommends limiting gold investments to no more than 5% to 10% of your portfolio. After all, gold can be volatile, Horvath says, and it isn't income-producing in the traditional sense. 

As a result, gold shouldn't be the main investment for seniors who often need stable, income-producing investments like bonds or dividend stocks, according to Horvath.

Understand your liquidity needs

Before investing in gold as a senior, you should be sure to understand your liquidity needs, experts say. After all, some types of gold investments are more liquid than others, meaning you can sell them for cash more quickly than the other gold assets.

For example, if you want to sell your gold investment quickly, a gold exchange-traded fund (ETF) or a gold mutual fund can provide more liquidity than investing in physical gold, such as a 1-ounce gold bar, says Horvath. 

"For many seniors, a low-cost gold ETF may be the most cost-effective option — it's easy to buy and sell," Horvath says.

Know the potential drawbacks

Before investing in gold, experts say you should make sure to understand the potential risks, such as the possibility of losing money.

"There are countless advertisements geared towards seniors that tout gold being a safe investment," says Melody Brady, certified financial planner and founder and principal financial planner at Beechmont Financial. However, gold, like any other investment, has risks, Brady says.

"Gold prices can fluctuate significantly," says Horvath. And while gold can be a hedge against inflation, Horvath says it doesn't always perform this role reliably in the short term.

"Gold is often thought of as a hedge against inflation, but it's not a direct hedge," says Bryan Minogue, certified financial planner, chartered financial analyst and founder of Kardinal Financial. 

"When inflation surged over 9% in 2022, gold was flat on the year. Over the long run, gold may work as a store of value, but there is no guarantee that the price of gold will match inflation in any given year or month," Minogue adds.

The bottom line

Adding gold to your retirement accounts could be a smart move as a senior. After all, it can help preserve your wealth, resulting in it stretching further during retirement.  But before you add gold to your portfolio, experts recommend contacting a financial advisor to make sure it fits within your overall financial plan. And, if you decide to purchase gold, only invest a small percentage of your retirement portfolio in this asset. "Gold should be part of a diversified portfolio that includes stocks, bonds and other assets," says Horvath.