Jasmine Birtles
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The Disadvantages of Investing in Gold (And Better Places to Put Your Cash!)
Ruby Layram
25th Jul 2025
Gold sometimes feels like the favourite child of the investing world. Everyone raves about its ability to hedge against inflation, provide consistent returns, and act as a safe haven during volatile times. However, I’m here to break the news that Gold (as much as we love it!) might not always be the best option for your investment portfolio.
If you’re hoping to grow your wealth in 2025 and beyond, there are a few things you need to know about why gold might not be your best bet and what you could do instead.
Why People Love Gold (and we do too!)
Gold has long been a symbol of security. It’s a physical asset, doesn’t rely on any one country’s economy, and tends to hold its value during uncertain times. That’s why people flock to it during inflation scares or market crashes.
It’s like a financial comfort blanket.
But… what if you’re not just trying to survive uncertainty? What if you want to actually build wealth?
That’s where gold starts to lose some of its shine.
Read: Is Gold a Good Investment? Everything You Need to Know
The Disadvantages of Investing in Gold
So, why might Gold not always be the best option for you?
1. No income or dividends
Gold just sits there. It doesn’t work for you. Unlike shares, which can pay you dividends, or property, which can provide rental income, gold offers… nothing. It’s purely a capital appreciation play. And that appreciation can be slow.
2. Limited growth potential
While gold is great at holding value, it’s not always great at growing it. Over the long term, it hasn’t performed as strongly as equities or even some property markets. Historically, the S&P 500 has outpaced gold by miles, especially if you reinvest dividends.
3. Costs can add up
If you’re investing in physical gold, you might face storage, insurance, and shipping fees. Even gold ETFs often come with management fees that chip away at your returns over time.
4. Volatile (but not in a fun way)
People think of gold as stable, but it can be surprisingly volatile, especially in short bursts. It tends to go through long periods of underperformance followed by brief spikes. That’s not always ideal for investors who need steady gains.
So Where Should You Put Your Money?
If you’re a risk-tolerant investor looking to grow your wealth, not just protect it, there are other options that may offer more bang for your buck.
1. Growth stocks
Companies in sectors like tech, clean energy, and healthcare have outperformed gold by a long shot over the past decade. If you’re happy to ride the ups and downs, growth stocks can deliver serious returns.
2. Infrastructure and real assets
From data centres to renewable energy projects, infrastructure funds often offer a mix of income and long-term growth potential. You can invest via ETFs or specialist funds.
3. Venture capital trusts (VCTs)
For UK investors, VCTs are a tax-efficient way to back early-stage businesses. They’re risky, but they come with juicy tax breaks and serious upside if you choose wisely.
4. Thematic ETFs
Want to invest in AI, cybersecurity, space, or even pet care? Thematic ETFs let you target growing global trends from just a few pounds. They’re accessible, diversified, and full of potential.
Should You Ditch Gold Altogether?
Not necessarily! Gold can still play a role in your portfolio, especially as a hedge against inflation or when markets look shaky. But it shouldn’t be your main wealth-building strategy.
A smart investor doesn’t put all their money into one shiny metal. Instead, think of gold as your insurance policy, not your growth engine.
Final thoughts
If you’re aiming to grow your wealth in 2025 and beyond, gold might be a piece of the puzzle, but it shouldn’t be the whole picture. With no dividends, slow growth, and occasional volatility, it’s far from perfect.
Want your money to work for you? Look at a diversified portfolio that mixes a bit of gold with higher-growth investments like stocks, ETFs, VCTs, and real assets.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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