3 reasons to buy gold for your kids
Gold may be the oldest investment product on earth. Today, gold is commonly seen as an investment for older people, but investing in gold can also be a good choice for younger people – and that's true even for children.
Buying gold for your kids now could be a good idea if you want to start building their wealth before they enter the adult world. And, if you want to get started, there are multiple ways to go about it — and multiple reasons to do so.
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3 reasons to buy gold for your kids
Here are a few reasons why it can make sense to invest in this precious metal for your children:
Gold hedges against inflation
While the recent issues with inflation have improved — the most recent report had inflation at just over 3% year-over-year — it peaked at more than 9% in June 2022. If you had money invested in a savings account during that time, you were actually losing purchasing power because rates weren't keeping pace with the inflation rate.
You can't predict what inflation will be over the course of your child's life, but chances are that there will be times when it is high, or even outpacing the savings rate you might earn from a bank. But the value of gold tends to track alongside inflation and, in turn, can work to hedge against those types of losses.
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Gold has inherent value
Many people open investment accounts for their children, putting the money in stocks, bonds or mutual funds. That isn't a bad idea, but there is inherent risk when you invest in the market. If you choose to invest in one company, there's always a chance it could collapse, leaving the shares worthless.
And, even if you invest in a market-spanning indexed mutual fund, if your kids want to cash out their account, they may be forced to do so in a down market, depending on the timing.
Gold, on the other hand, has inherent value. Even if the market is in turmoil, chances are gold will still hold value. By buying gold for your children, you are essentially guaranteeing them an asset with at least some cash value.
Gold investing has options
You might be a bit concerned about buying gold bars and coins, even if you are convinced that gold is a good investment for your kids, as this type of investment comes with storage and security concerns. There are lots of other gold investment options to consider, though, like gold stocks and gold IRAs, and — in particular — gold ETFs.
"You are purchasing shares of mining companies that can be sold in minutes at the end of every day if desired. The same shares may be exchanged internally for either tech shares, real estate shares, growth or value shares both foreign and domestic. I think this is the best way to purchase gold for children and adults alike," says Mark Charnet, a certified financial planner and the founder & CEO of American Prosperity Group.
Shares of gold ETFs can be sold at any time, offering near-instant liquidity if needed.
The bottom line
Parents want to set their children up for success. Investing in gold now — whether you're buying gold bars and coins or investing in a gold ETF — can help to make sure your children can put their best foot forward as adults.
