While it’s impossible to avoid risk entirely, investors should be taking proactive measures to de-risk their portfolios for robust retirement savings. You don’t need to be an economics major or a market whizz to protect your wealth from the inherent dangers of the market either. Implementing just a handful of simple strategies can successfully de-risk your portfolio for maximized returns in your golden years.
What does it mean to de-risk?
When it comes to retirement savings, de-risking is all about minimizing the threats to your nest egg. There are a number of factors that could negatively impact your wealth including stock market dips, rising inflation, and geopolitical issues. The primary goal of a de-risk strategy is to create a sturdier, more secure, and more predictable foundation for retirement in the face of these potential dangers. The closer you get to retirement age, the less time you have to recover from significant market downturns. This harsh reality highlights the importance of de-risking your retirement savings as soon as possible.
How to De-risk Your Retirement Savings
1. Diversify with precious metals.
Most investors understand the importance of diversifying their investment portfolios with different stocks. However, true diversification is only achieved when you place a portion of your wealth in tangible assets that hold inherent value. Precious metals such as gold and silver have been the go-to physical investments for their proven ability to hedge against economic pressures. Generally, experts recommend allocating 10-15% of your investments toward precious metals to de-risk against unpredictable threats.
2. Focus on physical metals
Many inventors make the mistake of buying paper gold in the form of gold ETFs, mutual funds, or certificates assuming these assets provide sufficient security. In reality, there are crucial differences between paper and physical gold. Paper gold assets are subject to the same volatility as mainstream investments. Alternatively, physical gold, in the form of coins, bullion, or bars, anchors your nest egg in tangible assets with value that exists independent of the paper market. In fact, gold and silver prices tend to increase when traditional markets stumble.
“When you’re dealing with gold and silver, you possess it. There’s zero counter-party risk.”–Precious Metals Advisor Damian White
3. Open up a precious metals IRA.
Newsflash: You don’t have to give up the tax advantages of standard retirement plans when diversifying through precious metals. A precious metals IRA makes it possible to de-risk your portfolio with gold and silver with tax-deferred dollars. You’ll be able to scoop up more gold and silver with each purchase without having to worry about Uncle Sam dipping his fingers in your investments…until retirement at least. Setting up a precious metals IRA is an excellent choice when cash reserves are limited so you can optimize your holdings over time.
Precious Metals IRA Rollover: Have an old retirement account you’re not using? Through a gold IRA rollover, you can convert money from an old 401(k) or IRA into a precious metals retirement plan.
4. Use the dollar-cost average strategy.
De-risking isn’t just about what kinds of assets you hold. A comprehensive de-risk strategy also accounts for how you invest. Instead of trying to time the precious metals market (which is impossible), you’re better off investing a fixed amount over time. Commonly known as dollar-cost averaging, this tried and true investment approach minimizes the impact of the market’s natural volatility. This results in a lower cost basis which translates to more gains in the long run as prices inevitably rise.
“You have the ability to adjust the average cost of your holdings over time because of the volatility of the market. You can take advantage of the ups and the downs and the swings as long as you understand you’re along for the ride.”–Precious Metals Advisor John Karow
5. Routinely assess risk.
Risk is an ever-present challenge when investing, but that doesn’t mean the hazards are always the same. An optimized de-risk strategy requires an ongoing survey of the threat landscape to address evolving market conditions and geopolitical factors. When your fingers are on the pulse of market risks, you’re in a better position to make informed decisions for a more secure and stable portfolio.
6. Work with a precious metals expert.
The precious metals environment is much more in-depth, diverse, and dynamic than many first-time investors might think. Unfortunately, diving headfirst into this world without any prior experience or knowledge brings its own risks. Overleveraging and overpaying are some common issues. Working with a reputable coin dealer or precious metals expert can help mitigate these threats by providing you with expert advice and personalized investment suggestions.
De-risk Your Retirement Savings With Gold
Gold deserves a place in your nest egg to de-risk against the pitfalls of traditional markets. Many investors make the grave mistake of building their entire retirement plan on traditional, fiat-backed stocks which buckle under the slightest pressure. Along with other precious metals, gold is a reliable store of wealth in the long term, especially through periods of instability.
If you’re wondering if investing in precious metals is right for you, check out our FREE gold and silver investment guide.