Gold and other precious metals provide diversification benefits, and may provide protection from inflation.
To add precious metals assets to an IRA, you will require the assistance of a gold IRA company who will open and purchase self-directed accounts on your behalf before placing investments into an IRS-approved depository for safe keeping.
Buying Gold
Long-term investments like gold can provide important diversification benefits in retirement portfolios, yet it’s crucial that investors understand its role within your overall strategy.
If you want to invest in physical precious metals through an IRA, first open a self-directed individual retirement account (SDIRA) that permits purchasing IRS-approved metals. Furthermore, an account custodian and metal dealer should also be identified to conduct purchases on your behalf.
Financial experts typically advise allocating no more than 10% of an investor’s portfolio to physical precious metals due to the higher risk associated with investing this way versus stocks or bonds. High account minimums may also force you to place too much risk into gold investing.
Gold bullion does not generate tax-advantaged income like other IRA investments do, which should also be taken into account.
IRA Custodians
Self-Directed Individual Retirement Accounts (SDIRAs) require the services of an outside custodian to operate. While these companies do not provide investment advice or sell investments directly to investors, they act only as record keepers. Therefore, investors must do their due diligence and make wise decisions.
Finding an open and honest custodian should be your top priority, as they should clearly outline any fees such as maintenance charges, set-up charges or transactional charges for every investment type they hold. Furthermore, an ideal custodian will have quick responses for all inquiries made about them quickly and efficiently.
A good custodian should also be capable of verifying information provided in investment statements, particularly with alternative investments that may be hard to value or liquid. To do this effectively and quickly, this can include consulting independent valuations from certified appraisers or researching tax assessment records – something required before purchase can take place.
IRA Fees
Fees associated with an Individual Retirement Account (IRA) account can quickly add up over time, and investors should keep close tabs on all associated fees such as account setup and maintenance charges as well as brokerage transaction and commission costs.
Transferring funds between workplace retirement plans and individual retirement accounts (IRAs) may incur rollover fees from their new provider, so when making this transition it is wise to read all fee disclosures thoroughly as funds from one plan may cost considerably more when invested into one with more fees than another.
Investors can open an IRA through various providers, including brokerage firms and robo-advisors. Brokerage accounts allow investors to purchase and sell securities while robo-advisors will build and manage an investment portfolio based on your risk tolerance, time horizon and other considerations. Not all brokers or robo-advisors offer equal services at equal costs; investors should do their research before selecting an IRA provider.
IRA Qualifications
There are various types of Individual Retirement Accounts (IRA), such as traditional, Roth and SEP IRAs. All three require you to have earned income to contribute; self-employed workers or small business owners might want to consider Simplified Employee Pension (SEP) or SIMPLE IRAs which allow higher contribution limits than regular IRAs with both employer contributions and employee contributions allowed. Savings IRAs provide lower-risk options like FDIC-insured CDs or money market savings accounts while investment IRAs give you access to many investment options that offer lower risk options like FDIC-insured CDs while investment IRAs offer many investment choices available under their umbrellas.
Be mindful when selecting either a traditional or Roth account of any income restrictions and upfront tax deductions associated with contributions. Be sure to review IRA fees such as account maintenance and transaction costs on your annual summary statement for an overview. June Sham is part of NerdWallet’s investing and retirement team; she has appeared on both “Today” Show and NBC Nightly News discussing topics related to personal finances and retirement.