Golden rule: Why younger investors are drawn to gold
By Chris Taylor
NEW YORK, July 18 (Reuters) -What asset class do millennials and Gen Z investors both want to own?
Here is an answer you may not have guessed: Gold.
Among wealthy investors under the age of 43, 45% own gold as a physical asset, and another 45% are interested in holdingit, according to a recent study by Bank of America Private Bank.
Those are far higher percentages than other age groups.
Usually this demographic is not interested in assets like gold, cash or Treasuries, because they are considered to be "boring," says Liz Young Thomas, head of investment strategy for digital financial services firm SoFi.
"As Treasury yields rise, cash is paying a high interest rate, and gold is rising along with it. We are seeing returns we normally don’t see in such a short period of time," Thomas says. "Naturally, when assets have strong returns, younger audiences start to perk up.”
This confirms another study by money managers State Street, which finds that millennials have the highest allocation to gold in their portfolios, at 17%, far outpacing both boomers and Gen X at 10%.
So what is going on? Why are younger investors so intrigued by a somewhat stodgy asset that has been around for thousands of years?
Part of gold’s renewed buzz is its healthy spot price, which as of this writing is above $2,400 per ounce.
It is also increasingly on the shelves in popular retail environments, which boosts visibility. Big-box chain Costco started selling 1-oz gold bars last fall and has been doing a brisk trade of up to $200 million monthly, according to Wells Fargo estimates.
Since younger investors’ interest has been piqued, what golden rules should they keep in mind? A few thoughts from the experts:
OWNING PHYSICAL GOLD CAN BE TRICKY
Part of the appeal of gold is that it is tangible. If the world’s financial system happens to go haywire, or currencies collapse, at least you would have something real to hold onto.
“I have found with my millennial clients that as they get wealthier, they are more interested in investing in directly-held, self-custodied gold,” says Eric Amzalag, a financial planner in Canoga Park, California, whose clients tend to use online precious metals retailer APMEX. That is because investment goals often shift from growth to capital preservation, Amzalag adds.
With physical gold you have unique challenges like: finding a reputable dealer who won’t take advantage of you; getting it delivered and stored securely; insuring your purchase; And then figuring out how to eventually sell it, since Costco is not about to buy that gold bar back from you.
To protect your portfolio, check out this advisory guide from the World Gold Council.
CONSIDER ETFS
An exchange-traded fund – either backed by physical gold, or one that invests in gold futures – takes away the problems of buying, storing and selling. It also makes asset exposure relatively easy.
“There are some fees associated with that, but ETFs are a nice alternative if you don’t want to actually take delivery of bullion and hold it in your basement,” says SoFi’s Thomas.
The largest such ETF, SPDR Gold Shares (GLD), carries an expense ratio of 0.4% and boasts one-year returns of more than 23%. A similar approach is to buy an ETF comprised of mining stocks, such as VanEck Gold Miners (GDX), which includes the biggest names in the sector like Newmont Corp. and Barrick Gold.
DO NO GO OVERBOARD ON ALLOCATION
Gold can certainly serve a purpose in a portfolio, as an uncorrelated asset and a potential hedge against inflation or volatility. But, as a commodity, it can also be quite volatile and fall in and out of favor with investors.
As such, equities should still be the main portfolio entrée for most investors, experts say. Companies that generate sales, earn profits, pay dividends and offer potential share-price appreciation make for a more dynamic asset class with superior long-term returns.
As for gold, younger investors may keep it as a complementary side dish, says Jonathan Cameron, a financial planner in Miami.
“We work with many young professionals, and we have been including a gold ETF (about 5%) in many of our clients’ portfolios as a hedge for several years,” Cameron says. “Everyone likes this decision.”
Editing by Lauren Young
免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。