Gold can be an attractive asset because of its ability to hedge inflation and protect assets over the long-term. However, investing in physical precious metals via an IRA may prove more complex than usual and require further investigation of fees and benefits.
Apart from paying an initial account setup fee, you will also need to locate a custodian that offers self-directed IRAs and partners with qualified precious metal dealers. There will also likely be storage fees and insurance costs to consider.
What is an IRA?
An Individual Retirement Account, or IRA, is an investment vehicle for saving for retirement that allows you to defer taxes with pretax dollars while reaping tax-free withdrawals once retirement age has been reached.
Gold and other precious metals provide investors with protection in times of turmoil by offering physical assets untouchable by governments. But investors must first carefully consider potential drawbacks before opening an IRA with precious metals as holdings.
Storage and insurance costs, which can reduce returns. Also, gold coins and bullion may not be as liquid as stocks and bonds; thus requiring you to wait longer before being able to withdraw funds from them.
When investing in a gold IRA, only work with a reliable dealer. Before signing any contracts or making purchases from such dealers, check for licensing, registrations and insurance from them to protect your investments and prevent costly missteps. In addition, the IRS imposes stringent guidelines as to which coins and bullion may be considered suitable IRA investments.
How do I open an IRA?
To open an IRA, the exact steps may differ slightly depending on your provider. But generally speaking, you’ll visit their website and select your type of IRA before filling in some basic personal information. In some instances you may also be required to fund it through various sources – whether by moving funds from bank or brokerage accounts directly into it, rolling over an existing IRA into it, or investing through their accounts directly. When considering each option and any associated fees – active investors tend to favor traditional brokers while passive investors often prefer providers who charge lower or even no fees altogether.
Once you’ve selected a provider, you have many IRA options to select from, including traditional, Roth and SEP IRAs. Furthermore, there is also an assortment of investments including exchange-traded funds (ETF), mutual funds (MF) and stocks available – NerdWallet advises considering tax diversification across your retirement savings accounts and comparing investment options until finding those which best suit your goals, income level and risk tolerance.
What are the benefits of an IRA?
Gold has long been considered an asset that provides security during times of economic unease. By adding gold to an IRA portfolio, you can diversify and protect it from market fluctuations while diversifying your savings plan for retirement.
Investment in physical gold may provide several advantages, yet one must carefully weigh all possible considerations before committing. First off, gold does not pay dividends or interest and simply serves as a store of value; furthermore it may be difficult to liquidate assets from a precious metals IRA since most traditional custodians don’t deal in physical bullion.
Furthermore, certain precious metals IRA providers may charge fees for account maintenance and storage charges that reduce overall returns on investment. It is therefore essential to compare the costs of various IRA companies before selecting one; some do not charge these fees, instead opting to provide high quality customer service – one such provider being U.S. Money Reserve Gold IRA which allows clients to buy American Eagle coins direct from mint rather than incurring annual storage charges and annual maintenance costs.
Can I invest in gold in an IRA?
Investment of precious metals through an IRA is possible, though a self-directed IRA custodian that supports physical metal investments must first be found. Once stored at an approved depository and insured against theft and storage costs, gold doesn’t offer instantaneous withdrawals like stocks, bonds and mutual funds do, so you may require some time until accessing cash for withdrawals is possible.
Gold may seem like a safe bet, but its price may drop when other assets perform better than expected. Furthermore, storage and maintenance costs for gold investments can be high and it doesn’t offer tax-advantaged growth like traditional retirement accounts do – you will only experience returns by selling your investment for profit or when turning 70 1/2. Finally, traditional gold IRAs require required minimum distributions (RMD).
