Is gold investing risky?

In an economy still feeling the effects of inflation and higher interest rates, investors' appetite for additional risk and volatility is understandably low. While some investments may provide a better return than others, the inherent risk involved can be a strong deterrent, leading many not to get involved at all. It could also lead some investors to question the risk and safety level of some other, less-known investment types like gold.

Gold can be a smart investment for a variety of reasons, although it too has its own risks investors should be aware of as they get started. These risks are different than those associated with other investment types, so investors should first do their research to make sure this type is right for them. Start by requesting a free investment guide here to learn more about this unique opportunity.

Is gold investing risky?

Gold investing, like other investments, can be risky if done haphazardly or with the intention of getting rich quickly. If done in a sober and careful manner, however, a gold investment can reap significant rewards over the long term. To get there, you'll want to avoid the following missteps.

Investing too much

A gold investment should be considered something to help your overall portfolio, not make up all (or even most) of it. Experts recommend keeping your gold allocation to 5% to 10% of your overall portfolio. More than that and you'll risk losing out on other income-producing investments like stocks and bonds. The latter two are where you can grow your savings so you have a substantial amount to work with upon retiring.

Gold, meanwhile, will help keep your portfolio steady and is unlikely to experience the swings in value stocks will. By keeping the right amount of each, you'll lower your risk and improve your chances of weathering any future economic downturns.

Learn more with a free gold investors kit here now.

Investing with the expectation of seeing immediate results

Gold prices hovered around a record high this spring after reaching $2,067 per ounce in 2020. Knowing this, some investors may think it's valuable to invest in gold now with the hope (or intention) of seeing immediate results. But the chances of gold going past that $2,000 threshold - and staying significantly above it long-term - are not great.

Instead, investors should view a gold investment more as a way to protect what they already have than as a get-rich-quick strategy. While it's certainly possible to buy gold at one price and sell it a significantly higher one, that's a risk that's generally not worth taking with this particular investment. 

Investing to have income-producing benefits

Investing in gold with the intention of having income-producing benefits is risky and, some experts would argue, unwise. Again, gold isn't really an income-producing asset as much as it is a safe haven and protector for other investments.

When the stock market goes down and inflation goes up, gold tends to hold steady, so your entire portfolio doesn't suffer. This a significant advantage for gold investors if they know that benefit in advance and don't intend to use gold as a way to make consistent income.

This is also why gold tends to be a better pick for younger investors, who have more time to play the market and develop their portfolio, than older ones who may need something to supplement their retirement savings and Social Security benefits. 

Not sure if gold investing is right for you? Learn more by requesting a free information kit now.

The bottom line

Gold has risks that come with it just like many other investments. There are ways to avoid these risks, however, to get the most out of this precious metal. Specifically, investors will want to avoid putting more of their money into gold then experts recommend (keep it to 10% or less of your portfolio). Investors should also avoid viewing gold as something they will see immediate results from - or as an investment that will produce income they can use quickly. If these risks are understood from the beginning, investors will give themselves the best chance at successfully investing in gold for years to come.