Precious Metals IRA:
Reason to Invest in Gold
If you are asking yourself if putting all your funds into a Gold IRA, and not sure what direction to go towards, the below guide can help you make the right decision. Knowing that not all IRA accounts, allow for investors to invest in Gold is a starting point, however with the right research and knowledge you could be on your way to building that retirement portfolio you so desire.
A Growing Trend
The price of gold has changed over the past few decades, what was once over $250 in 1999 has not increased to over $1900 in 2020, per ounce. Suffice to say there has been significant growth for this precious metal. When investing in a Gold IRA, it is good to first gain some knowledge about this asset before jumping into it.
A Gold IRA is a retirement account built for individuals who would like to put some funds aside into precious metals such as silver, gold, palladium or platinum. This is instead of the usual assets such as bonds, cash, and stocks. Click here for more about this.
This is one of the few commodities, that the IRS allows individuals to invest in when considering an IRA. It is similar to an “individual retirement account”, especially when it comes to the distribution rules and limitations of contributions. The difference however is in holding the physical metals, as opposed to paper bonds and stocks. So, you would ideally be investing in items such as Gold coins, or bars, or if you prefer, silver or any other of the precious metals mentioned above.
You can also put your money towards shares within gold companies, such as production companies or the mining industry, and even Gold ETFs that track indexes.
Investing in Gold IRA: How to Go About Doing It
Many countries may have a different way of doing this, however in general if you are considering holding physical gold IRAs, the first thing to do is to open a “self-directed IRA”: Investopedia.com/terms/s/self-directed-ira.asp which you have access to managing directly yourself or a custodian. The custodian, in this case, would be an approved financial institution such as a brokerage, trust company or even a bank.
The second step is to find a dealer who will purchase the gold for you. Sometimes a financial institution can recommend a well-established one. It is a good idea to first check with them if they offer an investment choice such as gold before you open your account. The options are to set up either a Roth IRA which has tax-free distributions or an SDIRA which would be a traditional IRA and is tax-deductible towards your contributions.
Once that’s done, you can simply choose the investments for the account and the rest of the process is completed by the dealer or custodian on your behalf. A point to note here is that when considering these physical metals, they must meet the standards of the IRS, in terms of their weight and purity. Unless you invest in coins, these must be approved by specific government minting facilities.
Benefits of Investing in a Gold IRA
Now that you are familiar with how you can generally open an account, there are a few benefits to think about to know what you will be getting out of it.
Control Over Your Future Finances
One of the main reasons why many individuals choose to put their money into this specific asset is because it gives them a sense of security and peace of mind knowing that they have greater control over it, and that, when the time comes, it will help significantly towards a better retirement. When you have control over your finances, it gives you peace of mind too.
If you are still skeptical, some well-established advisors can provide you with the right advice regarding this form of investment, and one such example is the Metals Resource company. Putting money aside has the risk of sometimes losing its value over time. However, because
Gold has had a positive outlook in its increase in value over the past couple of decades, it is a far better option to deal with. Take for instance the concept of inflation – this asset has always been seen to outperform inflation in the long run, and a good example is the 1917 cost of gold which was $20 per ounce, but in 2017 it went up significantly to a worth of over $1100 per ounce.
Besides the above benefit, other aspects include a higher quality retirement portfolio that does not decline in value like bonds and stocks would normally do. It provides you with a powerful hedge against typical paper investments. Stocks can crash at any time however Gold will not because it is characterized as a physical asset.
Lastly, it provides a type of insurance against any unforeseeable instances. Much in the same way as house insurance, car insurance and life insurance, gold too can provide a type of insurance that will help you when things get tough or when you are thinking of early retirement, and when you are ready to put things aside and enjoy your life without having to work for it, an account such as this is available to you from the age of 50 years. This is a lot earlier than the typical retirement ages of workers which in some countries can only be done at the age of 65 and over.