Gold investing by age: What to know

Gold is a popular choice for investors who want to enjoy reliable returns, liquidity and protection from the inevitable ups and downs of the market. In general, experts recommend keeping 5% to 10% of your portfolio in gold investments to maximize returns and minimize risk. But you may wish to adjust your asset allocation to fit your investment goals as you age.

For instance, when it comes to stocks, the rule of thumb is to aim for 100 minus your age. So, if you're 30, stocks should make up roughly 70% of your portfolio, but if you're 60, they should only make up 40%. That's because as you near retirement, you should focus on protecting the wealth you've built rather than aggressively seeking growth.

While investing 5% to 10% in gold is a good standard to follow, you may want to tweak your strategy at different life stages for a similar reason. How you do so depends on your individual goals, but there are some basic things to keep in mind.

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Gold investing by age: What to know

Here are some things you should consider as you decide how much to invest in gold (and how) in different phases of your life.

In your 20s

When you're young, time is on your side. You have a long time horizon to build wealth, so it makes sense to focus on growth-oriented investments like stocks and shares. However, it's still important to diversify your portfolio with a variety of assets to balance out risk and reward. With its stable returns and low volatility, gold can be a good way to do that.

One gold investment to consider are gold exchange-traded funds (ETFs). Gold ETFs track the price of gold and allow you to invest in the precious metal without owning physical gold, which can be expensive and cumbersome to store. You can also invest in gold stocks, which give you exposure to the gold market while also providing growth potential.

At this stage, you should aim to invest only 3% to 5% of your entire portfolio in gold. This will allow you to build a solid foundation with the asset while leaving plenty of room for more-aggressive, higher-growth assets.

In your 30s and 40s

In your 30s and 40s, you begin to take on more financial responsibilities, such as a mortgage or a growing family. At this stage, you should continue focusing on growth-oriented investments, but it's also wise to begin shifting your portfolio toward more conservative investments like bonds and gold to create long-term stability. Gold can hedge against inflation and market volatility, making it a great way to balance out the risk of higher-earning but more volatile assets.

You also likely enter your peak earning years at this time, giving you more disposable income to invest. It's worth considering adding a gold IRA to any other retirement accounts you own. This will give you time to build up a nest egg you can draw from in retirement when you don't have as much income to rely on.

At this point in your life, consider keeping 5% to 10% of your portfolio in gold investments. 

In your 50s and 60s

As you approach retirement, you should shift your focus toward preserving wealth and generating income. You should have accumulated a significant amount of savings and investments by this time, and you want to ensure they're protected. Gold can be a great way to achieve this goal.

Gold is widely considered a safe-haven asset that provides a layer of protection against market volatility. As such, it can be a valuable part of your retirement portfolio.

At this point in your life, your stock investments should be at a minimum — 50% to 40%, according to the "100 minus your age" rule. Putting more of your money into alternative assets like gold can give you peace of mind as you enter your senior years.

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The bottom line

As a general rule, 5% to 10% is a prudent gold allocation to aim for any investor. However, it isn't a hard-and-fast rule. Your investment strategy should also take into account your needs and goals in various seasons of life.

By focusing on growth-oriented investments when you're young and shifting toward more conservative investments as you approach retirement, you can build a well-diversified portfolio that maximizes your investing dollars while keeping them safe for the future. A financial advisor can help you develop a strategy that's best suited to you.