It’s no surprise that most customers who purchase gold are older, either nearing retirement or already into retirement.
Part of that is due to the fact that gold is expensive to purchase, and purchases of $50,000 or more of gold require funds that have been saved up over years, something that’s outside the realm of possibility for many younger Americans.
Part of that is also due to the fact that gold is often touted as a stable source of income in retirement, as its price tends not to fluctuate as significantly as stocks. But just because gold is popular with those nearing retirement doesn’t mean that it’s just an asset for old people. Younger Americans, even those in their 20s, can still take advantage of the many benefits of investing in gold.
Young Americans Have It Rough
As much as we like to think that the US is still in its prime, the reality is that our glory days may be behind us. A rapidly rising national debt, a central bank that engages in unending money creation, and the prospect of slower economic growth in the coming decades means that young Americans today have it harder than previous generations. In fact, the current generation of under-40 Americans may be the first in US history who can expect in most cases to be worse off than their parents. Why is that?
1. Student Debt
One of the major reasons young Americans will be worse off than previous generations is the fact that they are entering the workforce more indebted than previous generations. Total student debt today has eclipsed $1.7 trillion, and if you look at the trend, it just continues upwards. Many young Americans graduate college with six figures in debt, after earning degrees that only help them get a foot in the door, if that. As a result, they’re finding it incredibly difficult to dig themselves out of that debt hole and begin accumulating wealth.
2. Skyrocketing Housing Prices
Combined with student loan indebtedness is the high cost of housing. Rent prices in many large metropolitan areas are so high that young people have to live with roommates to afford an apartment, or several housemates in order to live in a house. And when it comes to buying a house, they can just about forget about it.
Forty years ago, many workers could save up for several years and afford to buy a house that cost maybe about three times their annual salary. Adjust those salaries for inflation, and those same homes in the metropolitan areas where workers earn decent salaries now cost ten times an annual salary. Even with lower than 20% down payments, workers have to save up tens or even hundreds of thousands of dollars to afford the down payment, closing costs, etc.
For many people in the 20-40 age cohort, the reality is that they’ll never be able to afford to live in the same neighborhoods they grew up in. They’ll have to settle for smaller houses or houses further away from their workplace. And their ability to build up wealth through home equity, the primary factor in household wealth in this country, will be greatly diminished.
3. Higher Healthcare Costs
Healthcare costs have increased significantly for most Americans, even for the young and healthy. Thanks to Obamacare, younger workers now bear a greater burden of healthcare costs than they used to. And that burden increases every year. In some states, healthcare costs can increase 10% or more every year. While that may not seem like a lot, once you start thinking about getting married or having children, the reality of spending 10% or more of your pre-tax salary on healthcare begins to set in.
Every dollar spent on healthcare, housing, or paying off debt is a dollar that can’t be saved for retirement or put to some other productive use. And with these three categories weighing heavily on younger Americans, it’s no surprise that Americans under 40 are finding it increasingly difficult to accumulate wealth.
4. Stagnant Salaries
Compounding the problem is the fact that younger Americans aren’t seeing the same salary growth as previous generations did either. Older Americans are staying in the workforce longer than before, limiting the chances for upward mobility. And with a continuing trend toward outsourcing, the well-paying jobs that previous generations took for granted are few and far between anymore.
5. Poor Market Performance
For those who are fortunate enough to be able to sock away a little extra each month, the opportunities for investing haven’t been that great in the past couple of decades either. During the stock market bull run of the 1980s and ‘90s, markets averaged over 15% annual gains from 1982 to 2000. But the ensuing dotcom crash wiped out significant amounts of wealth. And since 2001, stock market indexes such as the Dow Jones Industrial Average and the S&P 500 have averaged only a little over 5% annualized growth.
Combine that with the fact that many investors lost a lot of money during the 2008 financial crisis, stock markets took years to recover, and we’re currently on the verge of another financial crisis, and it’s no wonder younger Americans are frustrated with their ability to save up for retirement. Will they ever be able to match the financial well-being of their parents?
How Gold Can Help Younger Americans
It’s understandable that many younger Americans are frustrated with their lot in life, and with the financial performance of their investments. For those who followed conventional wisdom, emulating what they heard or saw from their parents, or who expected their investments to fare the same way as their parents’ investments did in the ‘80s and ‘90s, the past two decades have been undeniably frustrating. Thankfully, there are ways to escape that rut.
1. Gold’s Strong Track Record
If someone had told you in 2001 about an investment that would double the performance of stock markets over the next 20 years, would you have invested in it? If somebody had told you that that investment was gold, would you have believed him? Many investors wouldn’t have, and their portfolios prove it. Yet gold’s performance since 2001 has been nearly double that of the Dow Jones and the S&P 500, and that’s with stock markets at record highs and gold off its all-time highs.
Gold has always had a reputation for performing better when the economy is weak, but its performance over the past 20 years has really been amazing. It has been one of the few bright spots in a market in which investors have struggled to find any meaningful investment returns.
2. Potential for Growth
Gold’s growth isn’t just a thing of the past, either. With the economy still suffering from the effects of COVID lockdowns, and still likely to see reduced economic output in the coming years, the stage is being set for gold to make another phenomenal run. We could very well look back 20 years from now and see that gold has performed just like it did over the last 20 years.
Even if you think the US economy will continue to grow over the next 20 years, and that stock markets will eventually rebound to performance like we saw in the ‘80s and ‘90s, can you afford not to take a chance on gold? Do you want to look back 20 years from now and wish that you had bought more gold, like many investors do today?
3. Diversification and Flexibility
Investing in gold also offers the ability to diversify your investment portfolio, hedge against stock market crashes or other financial market turbulence, and can even enhance the flexibility of your investments. With a gold IRA, for instance, you can roll over or transfer assets from existing tax-advantaged retirement accounts into an investment in physical gold coins and bars. That gives your gold investments the same tax treatment as your conventional stock and bond investments in your 401(k), IRA, or similar account.
If you decide years down the road to move your gold investments back into stocks or bonds, as long as you have complied with IRS regulations, you can do that. In that way, a gold IRA offers you the ability to protect your retirement savings for any period of time you choose, normally without tax consequences, so that you can choose for yourself the makeup of your investments.
With that kind of flexibility, shouldn’t you start thinking about investing in gold? You don’t have to be an expert investor or financial analyst to get started investing in gold. And if you contact the experts at Goldco, they can help answer any questions you may have about how gold can help protect your savings. So, call Goldco today, and start harnessing the power of gold to build and protect your wealth.
Trevor Gerszt is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.
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