So many future retirees wonder if it’s worth investing in precious metals. They hear so much about the value of gold and its ability to act as a hedge against inflation. They know that precious metals are a solid investment, but they aren’t certain of all of the major benefits.
I don’t know about you, but I like to weigh the pros and cons of a particular investment before I make my ultimate decision. So, I’d like to share the pros and cons of investing in precious metals with you today.
By the time you get through reading this information, you’ll know if investing in precious metals is the right idea. And even more importantly, you’ll realize that opening a gold IRA is the way to go as an investor.
Investing in a precious metals IRA provides tremendous tax benefits and other valuable advantages that I’ll tell you about below. But we have to take the good with the bad as well. I will share some potential cons or negatives that might make you think twice about entering this investment.
In the end, choosing whether or not to invest in precious metals is up to you. Use this information as a guide to determine if opening a gold IRA is the best choice to meet your needs.
Precious Metals Investing Pro: The Tax Benefits Are Tremendous
Let me make something very clear before I dive deeper into this benefit. Investors only gain access to this benefit once they open a precious metals IRA account. If you do not have this type of retirement account, you will not reap the incredible rewards.
More than anything, I love investing in gold and silver because the IRS provides access to the incredible tax loopholes. These loopholes are so wonderful that it is crazy that so many Americans fail to take advantage of them.
Basically, as a precious metals IRA investor, you can open your account two different ways. You can open a tax-deferred precious metals account. Or you have the opportunity to open a post-tax precious metals IRA account.
You might be wondering, “What’s the difference between the two account types?” The answer to this question is as follows:
- Pre-tax gold IRA – this account is known as a traditional self-directed IRA. This account is funded using money that hasn’t been taxed yet. This money comes directly off of your yearly adjusted gross income, so you will not pay taxes until you take distributions in the future. You can continue to fund your account with pre-tax dollars year after year. This gives investors the opportunity to grow their wealth precipitously. They’ll do so with money that they likely would have given to the federal government to pay their taxes.
- Post-tax gold IRA – another name for this account is called a Roth self-directed IRA. In this account, the owner funds the account with money that they already paid taxes on. The benefit of this account is that you’ll never pay taxes on any of the gains earned within it. You can continue to fund it year after year using post-tax dollars. And as your investments accumulate throughout the years, you get to keep every penny for yourself in retirement.
Do you see the tremendous value of the tax benefits provided by a precious metals IRA? This is an opportunity to earn wealth at the highest level. And too many American investors are missing out on this amazing opportunity.
Precious Metals Investing Pro: Gold Consistently Gains Value Year after Year Over the Long Term
Let me clarify this point a little bit better. Like any other investment, gold definitely has its down years. But if you look at the value of gold over the last 50 years, you’ll see that its average is tremendous.
Gold has gained an average of 10% per year every single year since 1971. Some years gold may have gained 60% in value. Other years gold may have lost 20% of its value. But the average of all of these years combined shows us that Gold has a tremendous track record over the long term.
How can you benefit? The best way to invest in gold is through a precious metals IRA because it promotes long-term investing. You can begin buying gold in your 20s and you don’t have to sell any of it until you reach your 70s. Imagine growing your wealth by 10% per year compounded for the next 50 years. Think how quickly your money will grow! It’s truly an incredible opportunity that too many people are missing out on.
Here’s what I think you should do…
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Precious Metals Investing Pro: Precious Metals Are a Great Hedge against Inflation
Did you know that precious metals act as a hedge against inflation? It’s true and it historically happens when the value of the US dollar gets weaker. Usually, the value of gold and silver get stronger at the same time.
What does this mean for investors? It means that during times of economic strife and negative sentiment, you should really begin buying silver and gold. Other precious metals also act as hedges against inflation as well including platinum and palladium.
Typically, most investors look at gold as the ideal hedge against a weak US dollar. And historically this is true. We can pinpoint times when the US dollar got really weak and the value of gold became incredibly strong.
Consider the housing market crash that happened at the end of 2008. When the housing market and stock market crashed, the value of property was practically cut in half. And the value of the US dollar wasn’t much better off.
Moving into 2009, the value of gold took off like a rocket. It went from somewhere in the neighborhood of $800 an ounce and got very close to reaching $2000 an ounce. Although it never quite got there at that point.
Nonetheless, did you see the writing on the wall? Did you see how the economy was in trouble? You could’ve invested in gold and more than doubled your money very quickly. This was a powerful opportunity to hedge your bets against inflation. And you could have followed the leaders and begun investing in gold and other precious metals.
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Precious Metals Investing Con: Gold IRA Investors Must Pay for Gold Storage in an Approved Facility
Let’s be clear once again. This disadvantage only happens to those who choose to invest in a precious metals IRA. Then again, some non-IRA investors also pay for storage because it’s the safest way to store their gold.
Regardless, if you open a precious metals IRA you will have to keep your investments safe in an approved facility. This typically costs the average investor anywhere from $100-$150 per year.
Guess what? If you invest heavily in gold and silver, you likely will accrue tremendous gains every year. Paying this minimal storage fee is a drop in the bucket for the privilege to make the most of these incredible tax benefits.
But some people don’t see it that way. So, I wanted to point out that you do have to pay for precious metals storage if you open a gold IRA account. Those are the rules and everyone has to follow them in order to qualify.
Precious Metals Investing Con: Buying Gold Isn’t As a Beneficial without the Incredible Tax Benefits
I keep bringing this up but I really want to hammer this point home. The reason precious metals investing is so valuable is because of the tremendous tax breaks afforded with a gold IRA. These benefits are crucial to your success. Why? Because the IRS lets you use their money to accrue wealth for decades before you have to begin paying taxes.
There is no other way to gain access to this special benefit. And I’m not trying to say that it only happens with a precious metals IRA because that isn’t true. You could open up a Roth IRA or traditional IRA without the alternative investing and still gain this benefit. But at the same time, without the ability to buy gold and silver, the account isn’t as valuable.
So, please realize that this tax advantage is really something to behold. It’s rare that the IRS gives the American people such a wonderful gift. But they did it so we have to start making the most of it sooner rather than later.
As you can see, there are definitely some big advantages to investing in precious metals. But there are also the occasional disadvantages to consider as well.
If you’ve decided to begin investing in a precious metals IRA, I applaud you for your ingenuity. And I’d like to help you get started on the right foot.
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