Gold is a hedge against inflation’s rising expenses. Getty Images
A 2021 survey found that more than one-quarter of Americans aged 65 and older lack $500 in savings to handle medical expenses. In addition to a lack of a consistent income, unanticipated medical expenses, and growing inflation, many senior citizens encounter additional financial obstacles.
To make ends meet, it is not surprising that some seniors may contemplate reverse mortgages, cash-out refinancing, and other possibilities. Considering gold’s past effectiveness as a hedge against inflation, it may be prudent to consider purchasing gold. When the cost of living increases, gold prices tend to increase as well.
If you are interested in this novel form of investment, you can begin immediately.
Is now an ideal moment to purchase gold? Exist instances in your life or this year when purchasing gold is more advantageous? Let’s examine gold as an investment and when you might want to consider purchasing it.
When should a person purchase gold?
Many investors include gold in their portfolios as an inflation hedge and store of value (an asset that retains its purchasing power without depreciation). Historically, gold has also been a reliable hedge during financial crises. The optimum time to buy gold, according to many experts, is when inflation or a recession is imminent, as its value tends to climb during these periods.
According to research from the World Gold Council, when inflation outpaces interest rate increases, as is now the case, commodities such as gold may outperform some traditional financial assets. As a hedge against inflation, individuals seek gold and other safe and stable investments when the dollar’s value declines.
Think about this: The 1970s were a decade of inflation, with an average interest rate of 5.84% in 1970 and a staggering 13.58 % in 1980. According to NASDAQ data, the price of gold increased from $35 per share to $850 per share throughout the same time frame.
Should young adults purchase gold?
Historically, gold buyers have been older investors, although younger individuals may benefit from investing in gold. For instance, if you are in your twenties to mid-thirties, you have approximately 30 years till retirement. When you have more time to save for retirement than an older person, you can take greater risks, making gold a more tempting investment alternative.
Is it better for older folks to buy gold?
According to AARP, despite gold’s allure as a safe haven, it may be too hazardous for retirees who require income-generating investments. In addition, gold’s value can endure tremendous changes over short periods of time or stagnate for years. Income-generating investments, such as dividend-paying equities, municipal bonds, and real estate investment trusts, may benefit older investors more. On the other hand, some investors may consider a little amount of gold as an insurance against a significant market crash, catastrophic economic issues, or even war.
Not certain whether gold is good for you? Examine your alternatives to determine whether this investment makes sense.
What season should someone purchase gold?
According to GoldSilver, an online trader in precious metals, the greatest periods of the year to buy gold are in early January, March, and early April, or from mid-June to early July. GoldSilver drew these results after analyzing the daily average performance of gold between 1975 and 2021.
Notably, the research revealed that there are times to purchase gold before its price increases. Gold prices increase on average during the first two months of the year. The price of gold declines over the spring and summer before rising again in the fall.
If you want to purchase gold before its price jumps again, you should begin today.
Remember that the price of gold is determined by supply and demand. Therefore, if you buy during a busy buying period, the price will be higher due to increased competition.
Another important discovery from GoldSilver is that typically, the lowest price of the year occurs in early January, making this the optimal time to purchase gold.
An alternate technique to market timing
As observed on any gold price chart, gold prices vary continuously. The price fluctuates in response to real-time trading activity, so keep a close eye on market movements online and watch for price dips to buy.
Understand that timing the market for the lowest price is challenging if you’re looking for the optimal moment to purchase gold. Buying gold in little quantities frequently may be a better strategy. In order to maximize your profits, you may be able to purchase gold at a cheaper average price if you divide your purchases into several smaller transactions.
Still uncertain about whether or when to purchase gold? An online financial advisor can provide direction.
Other alternatives to consider
When weighing the advantages and disadvantages of purchasing gold, it is helpful to examine your objectives. If you want to diversify your portfolio or hedge against inflation, it makes sense to invest in gold. But if you are an older American seeking income-generating investments or alternate sources of income, gold may not be advantageous.
Reverse mortgages and cash-out refinancing may be worthwhile options for elderly Americans in need of dependable cash sources.
A reverse mortgage enables homeowners over the age of 62 to use their home’s equity to pay down their existing loan sum. They are then free to utilize the leftover funds as they see fit. However, it must be reimbursed if the homeowner passes away or decides to sell the property. Nonetheless, it may be worthwhile to pursue if money is needed.
As an alternative to conventional mortgage refinancing, cash-out refinancing permits you to obtain a larger mortgage loan than the one you already hold. Then, you can use the new loan to pay off the previous loan and retain the difference. You can potentially receive up to 80% of the value of your home.
One thing to notice is that the benefits of each option depend on your individual circumstances, financial health, and ambitions. Consult a personal financial adviser who can take you to the most advantageous alternative.