o3 BLOG | Investing
Why Gold is the Best Investment for Millennials in 2021
If you asked an average millennial their stance on gold investments eight years ago, a typical response might be, “I’m still trying to pay off my student debt,” or “What investments?”
As millennials, we are no strangers to the impacts of economic upheaval — we entered the workforce right after 9/11 and just before the great recession. To add insult to injury, we experienced the fall of the housing market in 2008 (although our neighbours to the south got hit much harder).
But a lot can happen in eight years. Actually, a lot can happen in two years — and it has. The COVID-19 pandemic has impacted all generations, but millennials, in particular, had to do the most pivoting to navigate “adulthood.” More millennials realize the importance of diversifying their portfolio and hedging against economic uncertainty — bringing their attention to the significance of gold’s role in their financial planning.
Why Millennials Should Invest in Gold in 2021
In the post-pandemic recovery phase, millennials have cut down on discretionary spending while prioritizing secure investment options. If you’ve read any financial blog, you’re aware that gold is the ultimate safe-haven asset, especially in times of political and economic crisis. Both physical gold and gold stocks provide millennials with an opportunity to hedge against uncertain market conditions. Historically, gold is a consistent and steady performer over the long run. According to Goldman Sachs data on the US stock markets, the average 10-year annual stock market return was 9.2% (2010-2020).
1. Gold is a Real, Tangible Asset
While the crypto boom and bubble have made some digital asset investors a lot of money, many have also lost money due to the market’s volatility. When you contrast crypto’s rollercoaster rallies and falls with gold’s historical ability to hold its value, you’ll notice that gold is not only a safer investment, it is also far less stressful. Further, when you buy gold, you’re purchasing a tangible asset that you can physically hold — one that a hacker can’t easily compromise from another country.
2. Physical Gold is Easy to Buy and Sell in Case of Emergency
While many funds offer a decent interest rate, they also require you to put your money away for long periods. As many millennials are entrepreneurs, small business owners, and freelancers, the inability to access funds in real-time is not practical. It could leave you in a precarious position if disaster strikes. Gold is highly liquid and can be sold for cash relatively quickly.
3. It’s Never Too Early to Start Saving For Retirement
Millennials have faced many economic setbacks, and many of us will have to work for a long time before we can retire. However, even small contributions to your retirement plan can add up over time. Combined with gold’s upward trajectory, small contributions in gold investments during your 20s and 30s can grow exponentially by the time you reach your golden years.
4. Gold is a Better Alternative to Low or Zero-Interest Savings Accounts
Most everyday savings accounts offer an average return of 0.3%, maxing out at 1% if you’re lucky. Inflation is constant, but so is gold’s purchasing power. Inflation often outpaces interest rates, and without realizing it, millennials are losing hundreds a year simply because the costs of goods and services are on the rise. It can be costly to live comfortably, which is why you need to find creative ways to make your money work for you. While the value of gold has recently seen a clawback, its value is still steadily increasing year over year. The clawback shouldn’t be viewed as a negative — if anything, it should offer an onramp for new investors.
5. Gold Offsets Market Corrections and Crashes
Typically, veteran investors recommend dedicating anywhere from 5%–10% of your portfolio to gold. With people worldwide relying on government stimulus packages, there is a chance we can see the devaluation of currencies in the near future. In addition to heading your portfolio from such devaluations, gold investments and gold stocks can help offset a steep market correction or crash.
6. Gold is an Essential Part of a Diverse Portfolio
As the old saying goes, “Never put all your eggs in one basket,” which rings true when it comes to your investment portfolio. Seasoned investors will always spread their risks across a range of assets, including gold, gold mining stocks, and other gold investment products. Gold holds its value, and because gold mining stocks usually follow gold trends, they should be a staple in everyone’s portfolio — especially during these unprecedented times. Consider gold as insurance — it’s the asset that protects your portfolio when other assets fall.
Millennials are resilient and have learned to become more practical when it comes to saving and planning for the future. It can take years to recover from the damage caused by economic turmoil and inflation, however, gold offers a store of value to protect your financial future.
To learn more about investment opportunities and O3 Mining’s commitment to delivering maximum returns to our shareholders, contact our Investor Relations Team today.
To learn how O3 Mining can add long-term value to your portfolio, contact us today.
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