If you’re seeking to diversify your retirement portfolio with gold, look for an organization offering transparent prices, low management fees and educational materials about how physical precious metals have performed during various economic conditions in history. Be sure to compare IRA custodians and their respective fees before making your choice.
Be wary of high charges that will eat directly into your retirement savings.
Buying Physical Gold
If you want to buy physical gold and store it in an IRA, it is essential that you work with an experienced dealer and custodian. The IRS specifically prohibits keeping precious metals such as gold in your home or safety deposit box – any storage arrangements must take place with an IRS-approved depository or vault services company.
Additionally, you should understand how IRAs operate in general. An IRA is a retirement account that allows for either pretax or after-tax contributions and grows tax-deferred until withdrawal in retirement.
With traditional IRAs, taxes are due on withdrawal amounts; with Roth IRAs, tax obligations only arise when assets are liquidated. Physical gold purchased in an IRA doesn’t offer tax advantages because precious metals don’t generate dividends or interest payments. But physical gold can provide investors with longer-term investment strategies with higher potential returns that might help provide protection from stock market crashes.
Investing in Gold ETFs
If you want to invest in gold without dealing with storage problems, an ETF might be an ideal way to do so. Unlike physical bullion or coins which must be sold through third-party dealers who often charge commission fees on sales, gold ETFs can easily be traded online with just one click.
Before investing your money into a gold ETF, however, be sure to carefully consider all fees involved. As with other investments, brokerage fees for buying and selling these ETFs as well as storage and insurance costs could add up significantly.
Depending on your tax bracket and individual circumstances, any gains (capital gains or otherwise) from selling gold ETFs could be subject to ordinary income tax rates and be taxed as capital gains. Also keep in mind that gold isn’t considered “real” assets like stocks and bonds do – meaning it doesn’t pay dividends or earnings and could lose value over time due to inflation – so if holding gold for retirement be sure to carefully weigh any risks against your desired financial goals before investing.
Investing in Gold Mutual Funds
Gold can make an ideal addition to an IRA portfolio, but only when done properly. Working with a fee-only financial planner who specializes in precious metals IRAs will help ensure you reap maximum returns from your investment. Keep in mind, however, that unlike stocks and bonds, precious metals do not generate income and thus may not offer similar tax benefits as other investments do. Furthermore, once you reach age 70 1/2 it will become necessary for you to take a required minimum distribution (RMD) which could incur penalties if there are funds in another account available in another account if not available elsewhere in order for this to happen.
To invest in physical gold, it is necessary to establish a self-directed IRA that gives you more control and can hold more assets than traditional IRAs. You will then need a broker who can purchase physical bullion and a custodian like Goldstar Trust from Canyon, Texas who will store or keep hold of it all.
Investing in Gold Stocks
Gold stocks provide exposure to precious metals without the added hassle and expense of owning physical bullion, making this an attractive way of diversifying retirement portfolios without opening new accounts or paying storage fees.
Moy notes that gold has consistently preserved its value against inflation, making it an attractive retirement savings asset. Money saved for retirement with cash will no longer buy as many goods or services once retired due to inflation; on the contrary, gold’s value tends to increase with rising costs of living.
To invest in gold, it is necessary to establish a self-directed IRA account, which gives investors more options than traditional IRAs and requires only two services: broker purchasing the gold and a custodian such as GoldStar Trust in Canyon, Texas providing storage.