Opening a self-directed IRA puts you in control of your investments. It gives you the power and the ability to invest in ways that you see fit. This includes but isn’t limited to alternative investments such as precious metals like gold, silver, platinum, and palladium.
There’s more to a self-directed gold IRA than meets the eye. Sure, it gives you investment flexibility. But it does much more than that and the benefits are truly astounding.
In particular, this investment style fits perfectly with today’s economic climate. Although the Dow Jones and the S&P 500 seem to break records every other day, the economy isn’t quite what it seems. Remember, looks can be deceiving to say the least.
Are you ready to get started as a gold retirement investor? We’ll tell you about precious metals retirement plans, the benefits of opening a self-directed precious metals IRA, and much more.
Please keep reading to discover the truth.
Critical Information about Precious Metals Retirement Plans
You’ve decided to invest in gold and other precious metals. You realize that it’s a good way to hedge your bets against inflation. And you understand some of the other benefits we’ll go into greater detail about later on.
This type of retirement plan, known more specifically as a gold IRA or precious metals IRA, is increasing in popularity. Why? It puts you, the investor, in full control of your financial destiny.
Other retirement plans do not allow the account holder to choose their investments. They basically have a manager or a custodian that purchases all the investments for them. Things are much better with a self-directed IRA. You choose whether to buy physical gold coins or bars, silver coins or bars, or platinum or palladium options.
And you have choices as far as funding the account goes. You may have an existing retirement account including a 401(k), 403B, SEP IRA, or something different. You can transfer funds from the existing account into your new gold IRA when the timing is right.
Why Go through All the Trouble to Invest in Gold and Other Precious Metals?
Simply put, converting some or all of your retirement savings to precious metals like gold and silver is clearly a wise choice. The stock market is incredibly volatile at this time, so investing in precious metals creates more stability in your portfolio.
When investments like mutual funds, real estate, stocks, and bonds begin losing value, gold typically moves in a positive direction. So it acts as a hedge to protect your overall portfolio when your other investments are trending downward.
In a nutshell, many of today’s most successful investors buy gold and other precious metals for the following reasons:
- It increases returns in your overall portfolio without increasing your risk.
- It reduces your risk throughout your portfolio without having a negative impact on your overall returns.
- It’s a tangible and stable asset that doesn’t lose value whenever a political leader chooses to upset the economic applecart. Think Donald Trump and his current trade war with China as a prime example.
5 Crucial Precious Metals IRA Benefits
As we’ve mentioned thus far, it’s important to keep your options open as an investor. You have to invest in many areas to protect your downside risk. Opening a gold IRA account is one way to expand your investments. It will protect your downside from a tumultuous economy and the fading US dollar.
We’ve discovered five further reasons why future retirees need to begin buying gold in their retirement portfolio. To help you better understand the benefits, we’ll share these five reasons with you below.
1. The Growth Potential of Gold & Silver
If you have a traditional IRA, the way it performs will mostly depend on how well mutual funds, bonds, and stocks are doing at the time. These accounts live and die by the economy. So, if the economy suffers, so does your account.
Certain facets of the economy will cause weakness in bonds, stocks, and other areas. Even cash is at risk of losing value due to a falling US dollar. On the flipside, precious metals investments like gold and silver tend to rise in value when times get tough.
Why? Precious metals are a safe haven investment. And when things begin going wrong, investors look for new places to safely park their money. This in turn causes precious metals to rise in value. It’s simple supply and demand in action.
2. Precious Metals Act as Insurance against Failing Investments
Investors want to feel safe and comfortable in their retirement. Investing in precious metals provides this comfort and safety. How? By owning gold and silver in your retirement portfolio, your stocks, bonds, and mutual funds can lose their value because of a catastrophic event. But your gold and silver will still retain its value. In fact, it’ll undoubtedly be worth more than ever before. It can be used as currency accepted all around the globe.
As an example, let’s say you own 1000 shares of XYZ Corp. The company goes out of business suddenly and your shares are instantly devalued to nothing. They retain zero value.
Gold and silver, meaning the physical assets, have existed for thousands of years and they’ve never been devalued to zero. Also, since it isn’t a company, you don’t have to worry about precious metals suddenly going out of business.
3. Receive Tax Advantages through Gold IRA Investing
Self-directed gold IRAs are similar to other IRAs because they provide the same tax advantages. In fact, your yearly contributions could very well be tax-deductible, but this all depends on your current tax bracket.
Just like other IRAs, you’ll never pay taxes on gold sold within the account until you take a distribution. And then you’ll only pay the marginal tax rate and nothing more.
Hypothetically speaking, precious metals retirement investors gain a much higher rate of return after taxes for precious metals when compared to a typical brokerage account. In a nutshell, this tells you to invest in precious metals for higher returns than traditional stock market investing.
4. Diversification Leads to a Fruitful Retirement
Diversification is critical to a healthy retirement. By investing in multiple opportunities, you limit potential downside losses if one or more of your investments fail. Instead of losing everything, some parts of your retirement nest egg might thrive while others struggle. That’s why every future retiree needs to make precious metals investing a strong part of their retirement strategy.
Some alternative investments to consider adding to your self-directed IRA include:
- oil & gas
- real estate
- private equity
- and more
But for argument’s sake we’d really like to keep you focused on precious metals investing. It’s such a stable way to diversify your portfolio and protect your portfolio from the unexpected. By the unexpected we mean a struggling US economy. And let’s not forget a faltering US dollar and the whims of politicians willing to start a trade war.
5. Take Control of Your Financial Future
Finally, opening a self-directed precious metals IRA gives you full control of asset allocation. This is a rare and wonderful opportunity as an investor. Many other investments require account holders to put their money in someone else’s hands and hope for the best.
Most investments including a traditional IRA are restricted to traditional assets like mutual funds, treasury notes, stocks, and bonds. With a self-directed gold IRA, you have the option to purchase alternative assets. You can invest in areas such as precious metals, cryptocurrencies, commercial real estate, oil and gas, and more. You’ll never have this option with a traditional IRA or 401(k).
A Brief Recap Highlighting the Differences between a Gold IRA Rollover & Transfer
Many investors fail to realize the differences between a precious metals IRA rollover and a transfer. To help set the record straight, we’ll share the subtle nuances between the two below.
A rollover includes the following:
- You own an existing retirement account.
- Your custodian sends you a distribution check.
- You have 60 days to “rollover” this distribution into your precious metals IRA account.
- You will suffer penalties if you fail to personally deposit the check into your precious metals account within 60 days.
- You’ll also have to pay taxes on the distribution if the 60 day deadline lapses.
- You can only roll over this money once a year. This rule helps preserve tax-deferred status.
On the other hand, a transfer includes the following:
- You can initiate a transfer from one custodian to another at any time from your existing retirement account.
- You aren’t required to personally deposit the money like a rollover.
- You will let your retirement account custodian know that you’re transferring funds and they will complete the transaction.
- You can make as many transfers as you want as often as you want.
Final Thoughts on the Self-Directed Gold IRA
Are you beginning to see the value of a self-directed gold IRA? To reiterate, the benefits of this powerful investment vehicle include:
- investment diversification
- huge upside and growth potential
- major tax advantages
- full control over your investments
- insurance against a struggling economy and other factors
At this stage of the game, you must be chomping at the bit to discover the best way to get started down the path to retirement bliss. If we haven’t convinced you already, we’d like to direct you to our page titled Best Gold IRA Options. You’ll learn much more about this investment strategy and discover why it’s such a great investment vehicle compared to all the other gold investing options.
Or are you ready to begin investing in a gold IRA right now? We’d like you to visit our page titled List of Top 10 Gold IRA Companies to discover your options.