Should seniors buy gold bars and coins? 4 things to consider

Investing in gold can have appeal for investors of any age — but seniors today may be interested in the precious metal for its longstanding store of value, hedge against inflation and historical performance during market downturns.

Physical gold bars and coins, in particular, can be a good way to maintain liquidity while you directly benefit from gold's value. But there are important factors to account for before you invest — especially for seniors with a shorter investment horizon who may soon be living on a fixed income or need to generate income from their portfolio. Knowing these details about your potential gold investment can help you make the most of the bars and coins you buy over the long term.

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There are pros and cons for senior investors choosing to buy physical gold. These are four important factors to account for before you make your investment. 

Even if you know you want to invest in physical gold, there are a few ways you might choose to do so. 

For one, you can buy the gold bars or coins outright from a reputable dealer online or in-store. If you go this route, make sure you do your research to find a trustworthy seller based on previous customer reviews and the authenticity and purity of the gold offered. You'll also want to look up current spot prices for gold before you buy to make sure you're getting a solid deal.

Another option for buying physical gold is working with a gold investment company. This may be especially useful if you're interested in investing in a gold IRA. These companies can help you buy the amount of IRA-eligible gold you want and find an IRS-approved custodian.

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Investing in gold bars or coins can carry a significant price tag due to the price of gold itself — over $1,900 per ounce as of July 11, 2023. But there are other costs to consider that you may not have for other investment types.

For one, gold bars and coins typically have a markup from sellers when you buy them. Once you buy, you may need to cover transportation or shipping costs, as well as insurance to protect your investment. 

You'll also need to store your physical gold. Depending on the amount, this could be as simple as buying a home safe or renting a safety deposit box at the bank. But for larger amounts, it could be worth investing in safe third-party storage with a custodian.

One of the biggest benefits of gold is to diversify and help safeguard your portfolio from losses due to market volatility and inflation. While this is great for beginner investors with several decades of economic cycles ahead of them, it's also helpful for seniors approaching retirement. The economy is always changing, and allocating some of your portfolio to gold may be a good way to weather future periods of downturn. 

When you invest in gold bars and coins, specifically, your value is also directly tied to the price of gold. Other types of gold investments, like gold stocks or funds, may allow for indirect exposure to gold, but physical gold is one way you can track your investment directly with the gold market.

For diversification purposes, experts typically recommend dedicating no more than 5% to 10% of your overall portfolio to an asset like gold. But this is general advice for investors with very long investment timelines. Seniors may consider a smaller allocation to account for the shorter time period before they may need to start relying on their portfolio for income.

One thing that seniors should consider before investing in gold is the risk the precious metal may have for their overall financial plan. 

Beginners who have very long time horizons before needing to access their portfolios can afford to take on more risk than investors approaching the age when they may look to their portfolio as a source of income. 

While gold is a stable asset with a strong store of value over the long term, it does have periods of volatility. If your investment timeline is shorter, it may be difficult to bounce back from a drop in gold's price and maximize the value you can get from gold as an inflation hedge or diversifier.

It's also worth considering whether you risk potential gains you could get by allocating more money to traditional stocks and bonds, especially those that can earn dividends for senior investors. That's why it's increasingly important to choose the right allocation so you can benefit from your gold investment while maintaining the ability to grow your portfolio elsewhere.

Learn more about how you can benefit from gold today with a free investment guide.

Investors of all ages may find benefits from buying gold bars and coins. Physical gold can be a great way to gain direct exposure to the gold market to protect your overall portfolio from inflation, economic uncertainty and more. But for seniors, it's also important to consider factors such as the overall cost, how you allocate your gold to best benefit from diversification and the potential risks. 

If you're interested in gold investing today, consider speaking with an expert like a trusted financial advisor who can help walk you through incorporating gold into your individual plan — and start exploring more options now with a free information kit.