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Table of Contents
As mentioned in this article, FarPlanner suggests a three-account investment portfolio, allocating between cash, bonds and stocks. Does it make sense to add gold and precious metals to the mix though? Let’s dig deeper into gold investing and adding gold to your investment portfolio:
- The pros and cons of investing in gold,
- How gold compares to other investments, and
- What percentage gold allocations might make sense for your personal portfolio.
- If your financial planning team feels gold is right for you, we’ll round out with how FarPlanner can help suggest transfers you could make now from your accounts into a new gold ETF based on your future plans.
Benefits of Gold
Gold has been prized by societies for centuries, with a perceived value that transcends economic shocks and individual countries money policies. So much so, that some folks purchase physical gold as a hedge against the complete collapse of economic society and/or a zombie apocalypse. It turns out there could be room for physical gold even for long range investments, but more on that later.
The luxurious shiny metal has also driven vanity purchases like jewelry and royal adornments throughout humanity. Beyond being an expense item in your budget though, how does gold stack up as an investment?
er this article from VanEck, gold has been in demand of late reaching $4,500 an ounce levels. Central banks have been buying gold in the last few years to diversify their reserves, while investors seek protection amid concerns of geopolitical risks, pricey equity markets and desire for diversification.
Risks and Costs of Gold
As this Horizon Trust article notes, gold is not without risks, with sharp price swings possible, and lack of interest payments or passive income like with stocks and bonds.
Physical gold requires costs for storage and security, and must be verified for authenticity and purity both for buying and selling. Gold IRAs can manage your physical gold in tax deferred retirement accounts, but require meeting IRS purity standards in approved depositories that can add fees.
Gold ETFs track gold prices while offering liquidity and offloading the physical management, but have higher investment fees than other ETF investments that can significantly reduce investments gains over future decades.
Comparing To Other Investments
At the time of this article, gold was about $4,500 per ounce, more than twice it was in 2022. While that sounds impressive, over a time period from 1985 to 2025, Kiplinger’s noted that gold’s value had an annualized return of 6.7% before inflation, 3.8% adjusted for inflation.
Conversely, US large cap stocks returned 11.9% before inflation, 8.9% after. Additionally, large cap ETFs have a lower expense ratio (about 0.03%) versus gold ETFs (about 0.10%) yielding even greater returns over a decades long timeframe.
While gold may not be the strongest long term investment option, it does shine (pun intended) when correlated with those other investment options. As State Street Investment Management reported, “Gold has demonstrated a low and negative historical correlation to many financial indices over time, potentially helping to smooth out volatility and preserve wealth.” Gold has also shown a strong inverse relationship to the US dollar.
Finally, comparing gold with cryptocurrencies like Bitcoin, this CryptoSlate article notes that “crypto’s correlation with the Nasdaq 100 in 2025 and early 2026 has been as strong as +0.35 to +0.6, whereas Bitcoin’s correlations with gold and the US dollar have weakened to roughly zero in recent years”. Indeed, looking at the wild price fluctuations of the Etherium cryptocurrency you see the same price today as in 2021! Hence, cryptocurrencies appear significantly less protective to portfolio diversification than gold.
Gold Portfolio Allocation Percentages
Clearly there’s a solid case (another pun intended) for adding gold to your portfolio, but what percentages do experts recommend?
This GR Reserve report suggests more conservative (about 10 years to retirement) target of 5 to 8% gold allocation, 7 to 12% intermediate time range (about 25 years to retirement), and 10 to 15% aggressive (more than 25 years to retirement).
This Yahoo Finance report asked a panel of exports for their thoughts on gold allocations, ranging for 0% (not worth the tradeoffs in the long term) to 20% (due to expectations of increasing inflation and devaluated currencies).
How Can FarPlanner Help Add Gold To Your Portfolio?
FarPlanner lets you quickly build a thorough financial plan, including current and planned home & automobile loans and expenses, as well we current and planed family members’ income & expenses. FarPlanner can then examine your planned activity to estimate when you need funds by (net expenses minus income) throughout your plan, up to 100 years into the future.
You can tell FarPlanner how to allocate across your accounts based on when you need net-expense funds by. For example, suppose you are allocating accounts within a 401k allocation group using the 3-account strategy:
As FarPlanner simulates your plan, it mimics allocating funds into your Cash account to cover estimated net-expense funds up to 6 months into the future. Bonds are used for net-expenses up to 4 years in the future. Stocks are used for further out net-expense needs. FarPlanner will use these settings across your entire plan’s future.
Suppose you and your financial planner decide to add a Gold ETF to your portfolio. You can quickly update your 401k’s allocation percentage as shown in this example:
Observe that a Gold ETF has been added to the allocation table using allocation percentages per the expert recommendations above. For example, FarPlanner will allocate 5% of the 401k’s account balances into the Gold ETF whenever FarPlanner estimates net-expense funds are needed more than 7 years into the future. For net-expenses needed more than 15 years out, a 10% Gold ETF allocation will be used. The most aggressive 15% is only used for long range net-expenses more than 25 years in the future.
FarPlanner then suggests transfers you can make right now into the new Gold ETF, per this example:
As you see on the red-circled row, FarPlanner suggests a transfer of $14,739 from the existing Stock fund into the new Gold ETF fund. Transferring this amount is expected to satisfy current and future net-expense needs, and adhere to the % allocations you configured in the table above.
If you use a Gold IRA to track physical gold holdings instead, you can create a new retirement allocation group in your FarPlanner plan, with a single gold account inside to track the gold holdings’ market value over time.
Finally, while you can add a Gold ETF to your taxable groups (e.g., General Usage), but FarPlanner is currently using the normal capital gains rate on transfers out of the Gold ETF, instead of the higher 28% rate that the IRS charges for collectable outflows such as gold. Hence, FarPlanner might underestimate taxes due for Gold ETFs added to taxable groups.
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