Is a gold investment safe for beginners?
With so many investment options and only one budget, it helps to do your homework before getting started. While you can earn significant returns with assets like stocks and bonds, you can also lose substantial amounts of money, often overnight. Because of the potential for this, many experts advise investors to diversify their portfolios with a mix of asset classes and accompanying risks. One such asset that many have turned to this year is gold.
Investing in the precious yellow metal hit an 11-year high earlier this year. That's due to various factors that have come into play in today's economy. But is a gold investment safe for beginners — or should they consider putting their investing dollars somewhere else? That's what we'll help break down below.
Start by reviewing your gold investing options here to learn more about this unique opportunity.
Is a gold investment safe for beginners?
To start, there are virtually no investments without some inherent risks. Even certificates of deposit and high-yield savings accounts come with the potential for a changing rate environment that could affect your earnings. That said, gold is generally considered a safe investment for those of all ages, particularly beginners. Here's why:
Its price tends to stay steady
The price of gold today is not too far off where it was one month ago and six months before that. So, if you're looking for an investment that won't typically experience major fluctuations gold can be it.
That said, the key word in that prior sentence is "typically," as gold can and will rise and fall in price. But, over time, those changes tend to be less dramatic than what you may experience with other assets. And the trajectory is generally upward, even if it takes a few stops and starts to get there.
Case in point: The price of gold per ounce today is $1,984.29. On October 6 it was $1,832.49 and on April 6 it was $2,007.79. Now compare those changes to some other, more volatile assets this year and it's clear that the overall price of gold tends to stay steady.
Learn more about how gold investing works here now.
It can be durable during times of inflation
While there may be a lot of individual reasons why investors have turned to gold this year, one of the inarguable ones is due to the protection it can provide against inflation. Unlike some other assets that may suffer during times like these, gold often shines during inflationary periods. It may even see its value rise when other assets look shaky.
When inflation is high and corresponding interest rates are elevated, data shows that gold can often remain durable. So, if an asset class can remain steady and improve in price during inflationary periods, it can generally be relied on as a safe investment for beginners during less volatile economic periods, too.
The demand remains consistent
People have been buying and investing in gold for centuries and the price per ounce has only gone one way: upward. While other investments can — and will — see their popularity and investing interest rise and fall, the demand for gold has always been there and likely will remain strong for years to come.
This makes it safe for beginners worried about the prospect of being able to sell their gold investments in the future. Strong demand will generally equate to an easier time selling the investment in the future if you choose to do so.
The bottom line
While no investment comes risk-free, gold can generally be one of the safer asset classes. That's because its price tends to remain steady, it has durability during inflationary economic periods and the demand for it has been consistently strong. That said, an investment in gold should be approached just as judiciously as any other investment and, according to many experts, kept to 10% or less of your overall portfolio. Learn more about investing in gold here now.
