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Should seniors invest in gold?

Many seniors could benefit from the diversification that gold can provide. Getty Images

Amid easing inflation and speculation the Federal Reserve will slow its aggressive schedule of interest rate hikes, many investors are turning to gold, which saw its market size spike more than 7% in November.

From gold bullion-like bars and coins to gold IRAs, ETFs and other gold investments, the shiny metal offers plenty of options for investors of all ages. 

Still, you may have less room for error if you're a senior living on a fixed income. Before you set your gold investment strategy, it's critical to thoroughly understand the benefits and downsides of investing in gold.

Start by requesting a free wealth protection kit to learn more about this unique investment opportunity.

Why seniors should invest in gold

Many seniors may benefit from the diversification that gold can provide. That's because gold has a low correlation with other assets like stocks and bonds. So, for example, if you're concerned your portfolio is overexposed to the stock market, adding a slice of gold to your holdings may make sense. 

Bear in mind, however, many experts recommend allocating just 5% to 10% of your holdings to gold. For seniors, that number may be even lower.

Gold may also be a good investment for seniors as a hedge against inflation, primarily because it holds its value longer than many other assets and may even earn a profit.

For example, during the 1970s, inflation soared from 5.84% in 1970 to a staggering 13.58% in 1980. But according to NASDAQ, gold prices catapulted from $35 per share to $850 per share during the same timeframe. 

While gold isn't typically a good long-term strategic investment for growth, it can outshine the stock market in periods of financial turmoil. According to GoldSilver, during the Great Recession from October 9, 2007, to October 9, 2009, the S&P 500 plunged 56.8%. But not gold. The precious metal actually increased by 25.5% during the same two-year period. 

Of course, no one can predict how the price of gold will perform. Before buying gold, consult your accountant or financial advisor for help determining your next move. And request a free wealth protection kit from Goldco now to learn how you could benefit from investing in gold. 

Why seniors may not want to invest in gold

Despite gold's ability to act as a "store of value" during economic turmoil, the shiny metal may be too risky for seniors, especially those living on a fixed income. Financial experts generally recommend income-producing investments for seniors over an asset that is historically susceptible to significant price fluctuations in short periods.

Remember, younger Americans have several decades to save for retirement. That's usually a long enough horizon to recover from a substantial drop in the price of gold. But for their older counterparts, there's less room for error, and the impact of a hefty price decline could be catastrophic. 

And even if the gold price remains relatively stable, it's not advantageous for seniors to have their money sit idle for an extended period. Instead, your money may be better served investing in dividend-paying stocks, municipal bonds, and other investments that pay out dividends.

Taxes are another reason gold may not be ideal for seniors. As a collectible, gold profits are taxed at a maximum rate of 28%. By contrast, capital gains taxes on stocks and bonds generally top out at 15%, in most cases.

The bottom line

Gold is often seen as a hedge against inflation, and adding a little shine to your holdings can help to diversify your portfolio. But seniors should generally avoid investing a significant amount in gold. If you choose to invest in gold, remember that experts advise only allocating a small percentage of your portfolio to gold. Consult your accountant or investment advisor for guidance for your unique financial situation.

The experts at Goldco can help you find an investment amount that works for your goals. Or you can review a list of top gold companies below to learn more.

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