Disclaimer: We are reader supported. We may be compensated from the links in this post, if you use products or services based on our expert recommendations. Please read our Advertising Disclosure.
There are many more choices when it comes to retirement investing than there were just a few years ago. One option that is gaining in popularity among investors of all ages is gold investing. While using paper investments, such as stocks and mutual funds, has always been an option for investing in gold-focused companies, investors of the past couldn't invest directly in gold.
Fortunately, the IRS has changed their rules, allowing for the creation of self-directed gold IRA accounts. When you open your own gold IRA, you can directly buy and hold gold as a retirement asset. There are benefits to this type of account that you just can't get by investing in funds that indirectly benefit from investing in gold-focused companies. With a gold IRA, you can buy as much gold as you need to meet your retirement goals or simply use gold to protect your existing wealth.
That's not to say that a gold IRA is ideal for everyone in every situation. Just as you would research any other type of investment, you should take the time to learn more about gold investing. The following overview can help you determine if you would benefit from starting a gold IRA.
Protect Your Wealth & Get Huge Tax Saving!
Why Should You Consider Starting a Gold IRA
Once you open a self-directed gold IRA account, you can begin rolling over your retirement savings from your 401k or traditional IRA. When the rollover is complete, you can begin using those savings to buy IRS-approved gold bullion and coins. Here are a few reasons you should consider following through with that process.
Gold Appreciates as a Tangible Asset
Our economy experiences gradual inflation over time, which causes the value of most tangible assets to rise. Just like real estate values are much higher today than they were 20 years ago, the same is true for gold. In 1999, gold was valued at $255 per ounce. In 2020, an ounce of gold was worth $1,937. While gold values do temporarily dip from time to time, the worth of gold gradually rises overall.
What does this mean for investors who use their self-directed IRAs to buy gold? Any gold bought today will be worth significantly more in a decade or two. If you buy gold today and don't plan to retire for 30 or 40 years, your gold will continue to rise in value even more. This helps you grow your wealth without having to watch market prices on a daily, weekly, or monthly basis.
Gold and Paper Investments Fluctuate Differently
When there's a recession or another type of economic downturn, paper investments tend to lose value. This is partly due to investors selling off their paper investments in favor of buying physical assets, such as precious metals. The increased demand for gold will raise its value during these periods, making any gold you already own worth more.
In most cases, the changes in the economy will drive gold prices up as the prices of paper investments drop. You can use this exchange to leverage any gold that you own by selling when the value of gold is at its highest. In this way, buying gold can help you protect your retirement wealth at a time when your paper investments are performing poorly.
Control Your Investment Diversification
When you work with a 401k plan manager or a financial advisor, they will recommend diversifying your wealth into a variety of investments to minimize losses. While that's good advice worth following, they may follow up that insight by recommending that you invest in a wider range of paper investments. The basic problem is that an economic downturn will affect all sapper investments similarly, so your wealth may still be exposed to losses.
When you divert some of your retirement savings to your gold IRA, you'll have a better range of investments. As paper investments lose value, your gold investments will remain constant. Your gold holdings will even increase in value in certain situations. Typically, when gold values dip, paper investments will be performing well. This means a good diversification strategy will help you balance your risks.
As a general rule, you should avoid investing all of your wealth in gold. If you're in your 20s or 30s, roll 15% of your retirement savings over into your gold IRA. Once you reach your 40s and 50s, you can roll a little more over. At this time, it's wise to have up to 30% of your savings invested in gold.
Guard Against a Political Upheaval
Political strife in any part of the world can affect the U.S. economy by negatively impacting the production of goods and interfering with the supply chain. If there is a political upheaval closer to home, the value of the U.S. dollar may drop significantly. In either of those situations, the value and availability of currency can prevent you from paying bills, providing food for your family, or meeting other financial obligations.
If our currency is adversely affected and you have a gold IRA, you can trust that your gold will still be valuable. During a political upheaval, precious metals may become the only form of currency that businesses will accept. This means your gold holdings will serve as an u insurance policy for you if some catastrophic event occurs. Even though that may seem unlikely, maintaining gold holdings will help you stay prepared.
Enjoy Tax Benefits
While contribution limits still apply to a self-directed gold IRA, all of the other tax laws also apply. This means your gold IRA contributions are tax-deductible, and you won't have to pay income taxes on your retirement wealth until you begin taking distributions. The increase in value that you earn from your gold won't be taxed and, when you do start taking distributions, you'll be charged the lowest rate within your tax bracket. This can help you save on the amount you'll pay in taxes during your retirement.
Which Gold IRA Company Should You Choose?
Ultimately, it's up to you to decide if you want to take advantage of the benefits that a gold IRA provides. For the most part, the risks of gold investing revolve around the occasional dips in value of the gold market. Other factors that may affect your gold holdings include the fees that your gold IRA company and depository will charge. You can minimize these costs by researching each company in advance. The following three companies offer the best rates and maintain the highest customer reputations in the gold IRA market.
As the top choice, Augusta Precious Metals offers a level of customer service that can't be beat, and you can see that dedication to quality service in their high Better Business Bureau ratings. They will assist you with your 401k rollover, and they provide a broad range of educational materials to help you learn about the gold market. They partner with three different gold IRA custodians, making it easy to get your account set up in one place. Although you're free to use any IRS-approved depository, they partner with Delaware Depository for added customer convenience.
This gold IRA company is popular for its wide range of IRS-approved precious metals. This means they offer gold, silver, platinum, and palladium that meet IRS standards for purity. They also work with Delaware Depository. You can choose any self-directed IRA custodian, but they recommend Sterling Trust. Goldco stands out for offering the highest buyback guarantee on all of their products.
A very simple account creation process and dedicated customer service are a few reasons that American Hartford consistently maintains an A+ rating with the Better Business Bureau. They offer IRS-approved gold and silver bullion and coins and partner with Equity Trust Company as their preferred custodian. Equity Trust also operates a depository for added convenience. Alternatively, American Hartford partners with Brinks, International Depository Services, and Delaware Depository. They provide a broad range of educational materials to help you learn about using gold investing to meet your retirement goals.
While a gold IRA comes with some risks, it's the only option for investing directly in gold for retirement. This allows you to continue growing your retirement wealth while you save the money you have already earned. Overall, gold investing gives you the opportunity to protect your future no matter how the global economy might change in the coming years.