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In the ever-evolving landscape of personal finance, novice investors are often faced with a wide range of choices when it comes to building a diversified portfolio. While traditional options like stocks and bonds remain popular, an age-old asset continues to shine as a valuable addition to any investment strategy – gold.
Over the last few years, gold investing has exploded in popularity — whether it’s gold bars and coins, gold IRAs, gold stocks or something else entirely — and for good reason. This precious metal offers a number of unique benefits to investors that can’t necessarily be gained with other types of assets. And, now that big box stores like Costco and Walmart are selling gold bars, gold investing has become even more of a hot topic. In fact, Costco has had trouble keeping inventory in stock because of the high demand.
But gold investing is still quite different from investing in more traditional assets, like stocks or bonds, so is it wise for beginners to invest in this precious metal? It can be. And, there are compelling reasons why beginners should consider incorporating this precious metal into their investment portfolios in 2024.
Learn more about your top gold investing options here.
5 reasons beginners should invest in gold in 2024
If you’re a beginner investor who’s on the fence about gold investing, here are a few good reasons why it makes sense to add some to your portfolio next year:
Gold is a time-tested safe haven asset
Gold has long been regarded as a safe haven asset, providing stability and security during times of economic uncertainty. In times of market turbulence or geopolitical unrest, investors often flock to gold as a reliable store of value. And, its historical resilience against economic downturns makes it an attractive option for beginners looking to safeguard their investments, so if you’re just getting started with investing, it can be a great tool to add to your investing toolbox.
Explore how gold investing can benefit you here.
Gold helps you balance your portfolio
Diversification is a key principle in investment strategy, and gold offers a unique opportunity for beginners to balance their portfolios. Unlike stocks and bonds, gold often moves independently of traditional financial assets.
What that means is that gold tends to head in the opposite direction of where stocks or the market head, helping to balance your portfolio. In turn, including gold in a diversified portfolio can help reduce overall risk and increase the chances of positive returns, especially in volatile market conditions.
This precious metal acts as an inflation hedge
Inflation is a persistent concern for investors, as it erodes the purchasing power of currency over time. And, while the inflation rate has declined significantly compared to last year, it’s still elevated above the 2% target rate set by the Fed.
But gold has a proven track record as an effective hedge against inflation and preserves your purchasing power. When the cost of living rises, the value of gold tends to rise as well, helping investors maintain the real value of their wealth.
And, for beginners looking to protect their assets from the erosive effects of inflation, gold serves as a valuable tool.
There are global economic uncertainties
The global economic landscape is growing increasingly complex, with various geopolitical tensions and economic challenges impacting the larger landscape. But in these types of uncertain times, gold provides a sense of stability and security. Its universal appeal makes it a reliable asset regardless of regional economic conditions, offering a hedge against systemic risks that can impact other investments.
That makes it a great option for newer investors, who may feel more comfortable having an asset that provides a sense of security in the midst of a challenging economic time.
Technological advances make it simple to invest
In today’s digital age, investing in gold is more accessible than ever. Technological advances have given rise to various investment vehicles, such as gold-backed exchange-traded funds (ETFs) and digital platforms that allow investors to buy and sell gold with ease.
And, that’s great news for beginners, who can easily leverage these innovations to incorporate gold into their portfolios without the need for physical ownership.
What types of beginners should invest in gold in 2024?
While gold presents a compelling investment case, it’s essential to recognize that not all beginners have the same financial goals or risk tolerances.
Here are some types of beginners who may find gold particularly suitable for their investment strategy:
- Risk-averse investors: Gold’s historical stability and low correlation with other assets make it an ideal choice for those who seek to minimize risk in their investment portfolio.
- Long-term savers: Gold’s ability to act as a hedge against inflation makes it an attractive option for those planning for long-term financial goals, such as retirement or purchasing a home.
- Investors focused on diversification: Gold’s low correlation with traditional financial assets provides effective diversification, helping to reduce overall portfolio risk.
- Cautious speculators: Gold’s combination of stability and the potential for value appreciation during times of economic uncertainty aligns with the goals of cautious speculators.
- Tech-savvy beginners: With the rise of digital platforms and gold-backed ETFs, technologically inclined investors can easily integrate gold into their portfolios, leveraging the benefits of accessibility and liquidity.
- Inflation-conscious investors: Gold’s historical role as an effective hedge against inflation makes it a suitable choice for investors seeking to safeguard their wealth from the eroding effects of rising prices.
The bottom line
As beginners embark on their investment journeys in 2024, the allure of gold as a timeless and versatile asset is hard to ignore. Its historical stability, diversification benefits, inflation hedging properties and resilience in the face of global economic uncertainty make gold a valuable addition to any well-rounded investment portfolio. And, with technological advancements making gold more accessible, there has never been a better time for novice investors to explore the golden opportunities that this precious metal offers.
