Most investors stick with ordinary types of investments in their retirement accounts, such as stocks, bonds, mutual funds, and ETFs.
But if you want to ratchet your savings potential up a notch, a self-directed IRA may be for you.
Self-directed IRA’s unlock a whole universe of exciting investments that you can hold under a tax-advantaged umbrella. These include hard assets like real estate, business ventures, and yes – even physical precious metals.
Spot prices are so low nowadays that it may interest you into holding bullion in your IRA. But you wouldn’t know where to start. If so, you probably have some (or many!) questions.
We’re here to lend a hand. Let’s start by answering 5 of the most frequently asked questions our customers ask us about self-directed precious metals IRA’s.
1) What is a Self-Directed IRA?
- You make all of your own investment decisions (hence the name “self-directed”).
- You have the freedom to choose from a wide range of investment options outside of traditional stocks, bonds, and mutual funds.
- A self-directed IRA allows you to “self-direct” IRA money into nontraditional investments like real estate, commodities, physical precious metals, and a host of other options.
So if you want total control over every aspect of your IRA, and you’d like to leverage your knowledge of business, real estate, or other nontraditional investments (like precious metals) for the potential to earn a higher return, then a self-directed IRA may be for you.
2) What is the Benefit of Owning Precious Metals in an IRA?
Precious metals prices generally move in the opposite direction of paper assets.
Plus, self-directed IRA’s allow you to own physical bullion. With traditional IRA’s you are limited to merely precious metals mutual funds or ETF’s.
3) How Do I Open a Self-Directed IRA and Buy Precious Metals?
To open a self-directed IRA, you need to find a custodian that handles these types of accounts.
But there’s a catch: Although there are several companies licensed by the IRS to service self-directed IRAs, you likely won’t find your well-known bank or brokerage firm among them.
Luckily, we’ve done the homework for you! View our List of Top 10 Gold IRA Companies and choose to work with the best.
4) What Kinds of Precious Metals Can I Buy in My IRA?
Precious metal coins or bars must meet specific IRS fineness standards to qualify for purchase in an IRA. (View Page: IRA-Approved Precious Metals)
5) How is the Bullion and Coins Stored?
The Internal Revenue Service states that you can own your own bullion in an IRA, but you can’t actually touch it. The moment it’s in your hands, it’s considered a distribution, which is taxable.
This is why Gold IRA companies will have depositories. These depositories will both move and store your precious metals for a fee.
Gold depositories will typically give you a choice between segregated storage and co-mingled storage.
Segregated storage is when your precious metals are stored in a separate vault from those of others in the depository.
Co-mingled storage is when your precious metals are stored in the same vault as those of other IRA-holders and are only separated by record-keeping.
It is important to choose a gold IRA custodian who gives the option of segregated storage and also gives a low flat annual fee for storage. The lowest annual fee for storage in the industry is $150.
This is one of the main reasons why we recommend Regal Assets as the #1 company in our List of Top 10 Gold IRA Companies. They have the lowest annual storage fees and will also pay for all the rest of your first year’s fees, including setup, administration and maintenance fees. They only have segregated storage.
Why Invest in Precious Metals?
When it comes to retirement, you want to make sure that your money is there for you.
Many investors purchase a gold IRA to protect their retirement portfolio with precious metals.
Clients often believe the stock market is overinflated. They also have a sentiment that a bubble in the stock market may burst soon, decreasing their portfolio value.
Inflation and the Value of Gold
Inflation is a nasty word because it erodes the purchasing power of the U.S. dollar.
It means that the consumer goods we buy regularly such as food or gasoline, exhaust more dollars annually.
In the year 1920, a 1-oz. gold coin and a $20 bill was worth the same. Each would have bought a man a custom tailored suit.
However, due to inflation, that same 1-oz. gold coin can still buy a custom tailored suit. However, the $20 bill cannot.
Many investors are waking up to the fact that over time the dollar has consistently lost purchasing power. They uderstand this is due to the government’s Quantitative Easing (QE) programs.
Think of gold as long-term protection of your purchasing power.
The National Debt and Gold Values
At its current level of $18 trillion, many believe the national debt has become unstable and unmanageable. This may result in panic setting into the market and create market uncertainty.
Physical assets like gold have often been viewed as independent of market cycles and a hedge against market uncertainty.
Because of the continued money printing that’s happening in this country, many believe the devaluation of the U.S. dollar and inflation could cripple retirement plans.
Regal Assets can help you learn how to safeguard your retirement for the future. After you open a gold IRA, you will be provided with an administration of veteran precious metals investors who can give you sound advice about your investment decisions.
Why Precious Metals?
While a diverse retirement portfolio is preferable, many workers are investing large portions of their retirement funds in precious metals like gold and silver.
When the economy took a nose dive several years ago, “We buy gold!” signs popped up everywhere. There were ads on TV, billboards along the highway, and jewelry stores at the local mall all wanting a piece of the stable gold trade market.
Historically, precious metals have shown a slow but steady increase in value — something that offers a “rock” of stability in uncertain financial times. But investing in precious metals can be disastrous if you’re not careful.
When to Invest in Precious Metals
Anyone can start a precious metals investment plan, but it’s especially important as you near retirement age.
To protect their savings from the volatility of the stock market, many individuals choose to rollover their 401K plans into a Gold or Silver IRA five to 10 years before they retire.
Others choose a split plan from the start, with a portion of their investments placed in precious metals.
After the stock market crash in 2008, many are leery of losing their investments just before retirement — with little to no time to recover.
How to Choose a Precious Metals Dealer
Scam artists are everywhere and the precious metals IRA industry is no different. You must choose your precious metals dealer wisely.
Here are a few points to consider when choosing a dealer:
- Physical gold or silver is what backs a Precious metals IRA.
- This means that you’ll have to store the metal in a secure location.
- Keeping your gold locked up in the family safe in the den probably isn’t the best option, so make sure you get details on your storage options before signing on with a dealer.
- Not all gold bullion or coins are equal.
- For investment purposes, you’ll need currency grade gold.
- The U.S. Mint has put certain standards in place to ensure investment gold is worth the dollars you use to purchase your gold IRA.
- Currency grade gold must have a fineness of 0.9999 percent in order to be suitable for investing.
- Anything less can’t be used for investments.
Investing in a gold IRA is right for those who want a secure investment option and are willing to forego large gains that might be possible with other investment options.
Investing in a gold/precious metals IRA won’t provide large profits in a short period, but it will provide a steady ROI over time — and it won’t wipe out your retirement in a volatile economy. It’s a good option for those who want to invest but are conservative or need a secure portfolio.
Do you have any questions on whether owning a precious metals IRA is right for you? Ask below!