Should beginners still invest in gold? 3 things to consider now
If you're a young investor ready to put money into a variety of asset classes, you may be familiar with a few traditional ones. Stocks, bonds and real estate all offer investors, especially beginners, relatively simple ways to grow their money over time. But in today's unusual economic climate, in which inflation is rising again but stock market performance is currently strong, these beginner investors may be less confident in their investment options. For some of these investors, a gold investment could be attractive.
An alternative asset better known as a hedge against inflation and portfolio diversifier, gold can still be a valuable alternative for beginner investors, even if it's conventionally thought of as an asset better suited for veteran and older investors. That said, there are some considerations beginners should account for before jumping into the gold market right now. Below, we'll break down three things to consider before adding a layer of gold to your portfolio.
Learn more about how gold can protect your money against inflation here.
Should beginners still invest in gold? 3 things to consider now
Here are three items that prospective beginner gold investors should consider now, before buying in:
Their short-term goals
Gold is less of an income-producer in the way stocks and bonds are and more of an income protector. So, if you're younger and have not built up much in the way of retirement savings or discretionary income savings, diverting too much of your money into gold may not be advantageous. You'll need to think of your short-term goals, then, to decide if gold makes sense for you and, if it does, how much to invest in the yellow metal.
That said, with a longer investment horizon than other investors, beginners may see more material benefits over time than older investors with less time to play the market. So, consider short-term goals versus what can be accomplished long-term to see where you fall on the gold investing spectrum.
Learn how gold can help you meet your investment goals now.
The price volatility
Gold prices change throughout the day, meaning that beginners will need to pay close attention to market conditions if they want to invest in gold below the current price. Overall, however, the price volatility of the precious metal will need to be closely considered to determine how it fits into your overall investing plan. The price of gold has surpassed numerous price records since the start of 2024, with no significant signs of slowing.
So, waiting for a cheaper entry price point isn't likely a strategy worth pursuing. At the same time, at close to $3,400 per ounce currently, gold may be cost-prohibitive for beginner investors just getting started. Understand the recent price dynamics and predictions about future price changes, then, to better determine where gold can (or can't) fit into your overall portfolio.
The need for a portfolio diversifier
It's always important to have a diversified portfolio, as many would attest in recent years when inflation and higher interest rates damaged the investments of many. Gold can reliably fill this role as its value tends to stay steady and even rise during inflationary periods.
This is partially why gold investing hit its highest point in more than a decade in 2023 as investors scrambled to diversify their portfolios. But how much of a diversifier you need, especially as a beginner or younger investor, will vary on a case-by-case basis. Consider speaking with a financial advisor, then, or a top gold investing company that can answer your questions and better help you build a personalized gold investing plan.
The bottom line
A gold investment has timeless benefits, regardless of where you stand on the investing spectrum. And, for beginners, gold can play a small but important role in a diversified portfolio, even in today's economic landscape. By closely evaluating their short-term goals, understanding the current price volatility in the gold climate and weighing their current needs for a portfolio diversification tool, these investors can improve their chances of gold success, both at this early stage of their investment timeline and, hopefully, well into the future.