Does It Make Sense To Buy Gold When You're Young


You're an investor under 30, probably just starting up your portfolio and in the position to invest seriously for the first time in your life. There are a lot of options. Your bank is likely trying to sell you products such as certificates of deposit and other low-interest, high-safety investments.

Financial advisors will tell you to put everything in mutual funds and not to worry about market ups and down. Your friends are probably telling you Bitcoin is on the verge of breaking through to impossible prices. Then there's gold, a safe haven that anyone in your life who has watched a market crash may be encouraging you to buy.

There's value to all of this investment advice (except that friend who's really into Bitcoin). Your portfolio should be diverse, and its exact composition is something that should change as you age, your income changes, and your savings goals evolve.

As a young investor, you should own some gold, but it shouldn't make up your entire portfolio and neither should any other asset. Many asset managers suggest that it should make up 3 to 10 percent of your portfolio, with some going as high as 20 percent in times of crisis. The number should depend on your age and risk tolerance.

Gold vs Stocks

Before making any investment decision, learn how that asset compares to your other options. Younger investors have finite resources and should be selective about their investment decisions. Since 1970, stocks have averaged a return of 7.2 over inflation, compared to gold at 6.3 percent. While those returns look like stocks are a better option, gold has outperformed other conservative assets like U.S. bonds and long-term treasures. These are the assets investors buy when they are worried about their money.

Gold Is A Crisis Investment

It may be smarter to think about gold not as an asset to buy in a crisis but an asset you will be happy to already own when a crisis happens. Fear is a powerful motivator on the market, and it lays behind many investor decisions. When stock markets tumble, investors race for safe haven assets like gold, and prices have always been at their highest after stock market crises, periods of high inflation, and when the U.S. dollar is low. When the race for crisis investments begins, you will be glad you already own gold and can enjoy higher appreciation than those who waited.

You can learn more at Silver Gold Bull about how prices have behaved historically. Bullion dealers have a wealth of resources about investing, whether gold is right for you, and how prices have moved in the past.

Is Now A Good Time For Gold?

Given your limited resources, you need to make the right choice at the right time. In 2019, the world's biggest economies are slowing down, including China, Germany, and the United States, while the UK is on the brink of an unprecedented trade situation.

With the risks of a recession mounting toward inevitability, do you want your first move to be a risky one or a safe bet? Everyone should have investments or stocks and mutual funds, but it's unwise to overexpose yourself. 2019 is definitely a good time to buy gold.

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