An Individual Retirement Account, or IRA, can offer diversification for an investment portfolio and help protect against inflation.
When selecting a precious metals dealer, look for customer reviews that highlight positive experiences as well as companies providing full insurance and secure storage – plus those that abide by IRS regulations.
Precious metals can provide retirement accounts with additional stability, yet come with extra fees such as dealer, custodian and depository costs.
1. Diversification
Gold can add a layer of security to retirement savings accounts, but should only serve as an addition and not as a complete replacement. A fee-based financial advisor can assess your portfolio and make suggestions regarding what portion should be allocated toward precious metals such as an IRA.
Consider their reputation and transparent fees when selecting an investment company to work with. Look for those offering money-back guarantees, fair pricing guarantees and seven-day price protection as well as their buyback policies and how the firm stores physical precious metals. Furthermore, choose companies with knowledgeable associates who can answer your questions about investing alternatively as this process should be simple, effortless and hassle free – the best companies will make the process seamless and painless!
2. Inflation Hedging
Inflation can quickly reduce the value of paper assets such as cash, stocks and bonds; however, precious metals like gold and silver typically retain their purchasing power during periods of inflationary pressure, helping protect retirement portfolios during economic turmoil.
Gold IRAs allow investors to diversify their portfolio by investing in physical precious metals instead of traditional investments like stocks and bonds. However, it’s important to remember that precious metal IRAs come with additional fees than traditional IRAs such as setup costs, transaction costs, custodial fees for storage purposes and custodian fees for physical precious metal storage facilities. It is also crucial that investors find an IRA provider with excellent customer service capabilities who comply with IRS regulations.
3. Taxes
The IRS allows self-directed individual retirement accounts to invest in precious metals – including gold, silver, platinum and palladium – but investors must follow strict rules regarding purchasing and storage of physical bullion. Furthermore, annual contributions are limited by the IRS.
Investors must work with three separate entities in order to comply with IRS rules: precious-metals dealer, custodian and depository. Each company charges fees that can vary widely. Fuljenz suggests when searching for dealers it is wise to look for long history and excellent BBB ratings as well as membership with respected industry organizations – these may provide the most value. Be wary of offers of free bullion as this could mask higher costs associated with buying more metal; additionally the IRS only accepts precious-metal bullion that meets purity standards as these will meet IRS regulations.
4. Security
Precious metals have long been seen as a reliable protection against inflation and national debt, rising during times of market instability while having minimal correlation to stocks.
If you’re considering investing in gold and silver, be sure to choose a reliable dealer. Before selecting any dealer, carefully examine their longevity, Better Business Bureau rating and membership in relevant organizations. In particular, avoid offers like free silver or “buy one get one free”, which can mask higher commission rates when it comes time to add new metals.
Gold IRAs typically carry higher fees than traditional IRAs in addition to the costs associated with purchasing and storing precious metals, including setup, transaction and custodial fees as well as storage and insurance costs. Furthermore, due to IRS rules an investor cannot store precious metals at home.
5. Taxes
Physical precious metal investments can be costly to store and insure, while their account holders also face additional costs associated with storage, insurance and fees associated with ownership. But investing in exchange-traded funds (ETFs) provides exposure to these assets at lower cost without the hassle of dealing with dealers, depository banks or custodians.
Owners of Individual Retirement Accounts must also abide by IRS rules on storage and purity standards; failure to do so could result in disqualification of the IRA and create taxable events.
Precious metals IRAs should only be included as part of your retirement portfolio in specific situations. Before opening one, it is essential to discuss your personal investment goals and current situation with a financial advisor in order to create the optimal account setup. In general, precious metals should account for no more than 5- 10% of your overall retirement portfolio.
