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6 safe gold investments to consider during retirement

Having the right mix of investments and savings is a crucial part of preparing for retirement. After all, most Americans say they’ll need about $1.8 million to retire, according to a recent survey by Charles Schwab. If you expect to need anything close to that amount for retirement, you’ll need to put away hefty amounts of money and make good investment choices to get there.

In most cases, your retirement investment strategy should shift over time to focus on preserving your nest egg. The closer you are to retirement, the more it makes sense to transition from riskier and potentially more lucrative investments to safer, more reliable assets, like gold. For many retirees, gold investing makes sense due to the unique benefits it offers, like long-term stability and the potential to hedge against inflation and economic turmoil.

However, investing in gold isn’t always as straightforward as it may seem, and there are various options to consider, each with its own set of advantages and drawbacks. So what are some of the safest gold investments to make during your retirement? That’s what we’ll look at below.

Learn more about how the right gold IRA could benefit you during retirement.

6 safe gold investments to consider during retirement

If you’re looking for a safe gold investment option during retirement, it may be worth considering the following options:

Gold bars and coins

One of the most direct ways to invest in gold is by purchasing physical gold bullion. Bullion refers to gold bars or ingots of pure gold, while coins are minted by government agencies and often carry legal tender status. Both options can be smart to consider during retirement.

The main advantage of owning physical gold as a retiree is that you have direct possession of the asset, which can provide a sense of security and control. And, the value of gold bars and coins tends to remain stable or grow over time, which makes it less risky than other types of gold investments.

However, it’s worth noting that storing and insuring physical gold can be costly, so it’s important to weigh whether the extra expenses are worth the benefits of buying gold bars or coins during retirement, especially if you’re on a fixed income. And, there may be challenges in selling it quickly if the need for liquidity arises, so be sure to take that into account as well.

Explore your best gold IRA options to prepare for retirement now.

Gold individual retirement accounts

For retirees who are seeking a tax-advantaged way to invest in gold, a gold individual retirement account (IRA) may be an attractive option. These self-directed IRAs allow you to hold physical gold, such as bullion or coins, within the account, and they’re typically a low-risk way to invest in gold.

There are a couple of caveats, though. For starters, gold must meet specific purity standards set by the IRS and must be stored by an approved custodian, which can come at an extra cost. And while gold IRAs provide potential tax benefits, they often involve higher administrative fees and may have stricter rules regarding the types of gold investments allowed. But if you’re looking for a safe, tax-advantaged way to invest in gold during retirement, a gold IRA could be a smart option to consider.

Gold exchange-traded funds

Gold exchange-traded funds (ETFs) offer a convenient way to gain exposure to gold during retirement without the hassle of physically owning it. These funds can be a smart alternative to gold bullion because they hold physical gold and issue shares that track the price of the precious metal.

Gold ETFs are traded on stock exchanges, and, in turn, are liquid and easy to buy and sell. They typically have lower management fees compared to other gold investment products.

However, it’s important to note that if you invest in a gold ETF, you don’t have direct ownership of the underlying gold. And, the fund’s performance may be affected by factors beyond the price of gold itself, so be aware that there may be slightly more risk with this type of gold investing compared to buying gold bullion. As long as you’re comfortable with taking on slightly more risk, buying shares of a gold ETF can make a lot of sense during retirement.

Gold stocks

Investing in gold stocks, which are essentially shares of gold mining companies, can provide indirect exposure to the precious metal during retirement. As the price of gold rises, mining companies tend to generate higher profits, which can potentially boost their stock prices.

However, gold mining stocks are subject to various risks, including operational challenges, regulatory changes and fluctuations in production costs. Furthermore, their performance is not solely tied to the price of gold but also depends on the company’s management, reserves and overall financial health.

In general, though, gold stocks can be a relatively safe investment to make during retirement, and if you approach it the right way, the returns could be more lucrative than what you’d get with another type of gold investment. The key is to do your research on the company and know what you’re buying into before adding the gold stock to your investment portfolio.

Gold mutual funds

Gold mutual funds invest in a diversified portfolio of gold-related assets, such as gold mining stocks, gold ETFs and physical gold. These funds are generally safer than some other types of gold investments because they’re managed by professional investment managers and offer a convenient way to gain exposure to the gold market without having to research and select individual investments.

However, gold mutual funds typically have higher management fees than gold ETFs, so it’s important to consider that factor before buying in. And, it’s also worth noting that their performance may not perfectly track the price of gold due to the fund’s diversification. In general, however, gold mutual funds are a smart, safe way to invest in gold during retirement.

Gold futures and options

For more experienced investors, gold futures and options can provide leverage and the potential for higher returns during retirement. Futures contracts allow you to speculate on the future price of gold, while options give you the right (but not the obligation) to buy or sell gold at a predetermined price within a specific timeframe.

However, these instruments are complex and can carry significant risks, including the potential for substantial losses if the market moves against your position. Still, there’s less risk associated with gold futures and options for seasoned investors, so if you know what you’re doing, this type of gold investment could be a relatively safe (and lucrative) way to buy into gold during your golden years.

The bottom line

Regardless of the specific investment vehicle you choose, it’s crucial to carefully consider your risk tolerance, investment goals and overall portfolio diversification strategy when adding any type of gold to your portfolio during retirement. Like any other asset class, gold investments carry inherent risks, though the level of risk can vary based on the type of investment you’re considering. As such, it’s essential to do thorough research before making any investment decisions.

And remember that gold should typically be a small portion of a well-diversified retirement portfolio, as it does not generate dividends like stocks and bonds. However, if you’re seeking a safe haven and potential hedge against inflation, investing in gold can potentially enhance the overall stability and resilience of your retirement portfolio.

Angelica Leicht

Angelica Leicht is senior editor for CBS’ Moneywatch: Managing Your Money, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.

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