Gold as An Investment Vehicle Towards Retirement
Gold has been used as a form of currency or store of value since human civilization first began over 4000 years ago. There is a reason why cultures across the world that had no contact with each other all valued Gold. While it may not have an excessive amount of practical applications when compared to other metals there are two factors that help to maintain its value.
Gold is not a metal that breaks down over time nor does it corrode. Most metals will break down over time which makes them poor choices to hold value. The second and possibly most important factor is that gold is rare. If there were an overabundance of it it would not be nearly as valuable.
This is led many to wonder whether investing in gold is a good idea for your retirement. This is a good notion. While it is important to diversify among various asset classes gold is a great hedge against inflation and other negative economic effects. One of the best ways to invest in gold as a way to save towards retirement is by opening a gold IRA. But what exactly is a gold IRA?
What Is A Gold Ira?
A gold IRA is very similar to a typical IRA except that the account will be funded using gold in the form of bars and bullion instead of stocks or bonds. These are IRAs that are also open to investing in other types of precious metals like silver or platinum as well. There are a couple of caveats that can complicate the decision of whether or not to invest in this type of account for your retirement.
The primary benefit of an IRA is that it defers the taxes on any earnings from your investments. Gold does not produce any earnings however so it may not necessarily make sense. This does not mean that it is a poor investment though there are still several reasons why you should consider adding this to your portfolio.
Gold And Precious Metals For Retirement
Of course one of the most basic aspects of investing is diversification. It is unwise to put all of your eggs in one basket so to speak. As if the value of this investment declines then it can affect your entire portfolio. Here are a few of the top reasons that you should consider diversifying your portfolio to include gold and other precious metals.
Top Reasons To Have Gold In Your Retirement Account
- Can Hold Multiple Precious Metals.
- Paper Asset Investments
- Diversify Your Portfolio
- Hedge Against Inflation
A typical Roth IRA is a type of managed investment where you can choose the allocation percentages of your portfolio but does not have control over the exact details of the investments. While this is not necessarily a bad thing it does illuminate a little bit of freedom from your choice of investing options. A gold IRA his entirely self-directed meaning that you select each and every detail on your own.
Can Hold Multiple Precious Metals
A gold IRA is capable of holding more than just gold. There are a number of precious metals that are allowed in one of these investment accounts. In addition to gold, you can hold various types of silver, platinum, and palladium. This is great as it allows even further diversification of your portfolio.
Paper Asset Investments
On top of an actual physical collection of precious metals, it is also possible to invest in specific derivatives and exchange-traded funds that are based on these precious metals. These are referred to as paper asset investments and they are actually capable of generating income where the tax can be deferred.
Diversify Your Portfolio
You have most likely heard the advice to diversify your portfolio enough to make you want to pull your hair out. There is a reason why so many people scream this at you during basic financial education. It is because it truly is beneficial for your retirement as overtime various asset classes will increase and decrease in value but by diversifying you can minimize the harmful effects of this.
Hedge Against Inflation
Finally one of the biggest reasons that people purchase gold as an investment in the first place is to protect themselves against inflation. While paper currencies value increases and decreases over time gold is typically far more stable.
Gold IRA Providers
There are a few companies that offer the services of gold IRAs. Not all of them are made equal, however. Here are a few things to keep an eye out to make sure that you are working with a high-quality provider.
Signs A Gold Ira Provider Is Worth Working With
- Proven Track Record
- Great Customer Service
- Open To Feedback
One of the very first things to keep an eye out for when you are shopping around for a provider is their track record. Have they been helping customers in the industry for just a few months or four decades? Are the customers that have been with them happy with the services that they have received? If the answers to these two questions are yes there’s a good chance that this company is worth working with.
Great Customer Service
There is more to a company than just a great track record. Since they are going to be managing such an important aspect of your financial life it is important that they are not a headache to work with. The best providers will have excellent customer service and make you always feel valued and appreciated.
While it is easy to assume that most people are already aware of the details of their investments a high-quality gold IRA provider will go out of their way to make sure that you have all of the information you need. If you feel that they are brushing you off that is a huge red flag. Make sure to ask plenty of questions during your first meeting with them to get a feel for how willing they are to help inform you.
Open To Feedback
Finally, the last thing to keep an eye out for is how open to feedback the company is. While they are obviously the professionals and there is a good chance that they have a better understanding of the market than you do ultimately no one is perfect. If they are unwilling to even hear your feedback that is another huge red flag. However, if they are open to discuss any feedback you have you should feel comfortable working with them.
Should You Have Gold In Your Retirement Account
It is impossible to give a blanket recommendation on whether these types of investment accounts are a good fit for your financial goals or not. This is always going to be a question that you must answer yourself. They are great during market downturns as gold historically outperforms stocks during economic hardship. Gold is also great as a hedge against inflation. Ultimately whether those two factors are worth opening an entirely new account for you is going to be for you to decide.
Frequently Asked Questions
How Good Of An Investment Is A Gold Ira
A gold IRA can be a great investment depending on your circumstances. If it looks like there is going to be a market downturn then the chances are that it would be worth investing in these as stocks will lose value as these will gain value. If there are signs of inflation than there is also a great chance that it would be worth adding a little gold to your portfolio.
Is It Possible To Own Gold In An Ira
Not only is it possible to own gold in an IRA that has tax-deferred earnings but you can hold several other types of precious metals. These metals include silver, platinum, and palladium.
What Are The Details Of A Gold Ira Rollover
In a gold IRA, you will have a custodian that holds the assets for you. The gold that is in your portfolio will be held at an IRS approved depository. Any earnings that Scout generates will have all of the tax-deferred until you withdraw.
How To Sell Gold That Is In Your Ira
Typically the process to sell off the assets that you are holding in your gold IRA is fairly straightforward. Most of the time all you will need to do is contact your brokerage and ask for the specific requirements to sell your gold. If you have met the requirements then all you will need to do is ask them to go ahead and sell off your assets. If there are requirements you still need to meet you must complete those first, however.