During uncertain financial times, people look for safe places to keep their money. Stocks go up and down, and the dollar can easily lose value. Yet, gold maintains its value even in such difficult times.
This is why a lot of people use a gold IRA to protect their future. You can get your gold IRA kit from a reputable company to learn more about this option. But before you do that, we’ll share the basic things you need to know about investing in this option. This article will help you decide if it is the right fit for your future.
What is a Gold IRA?
This is a retirement account that holds physical gold instead of stocks or bonds. The asset must meet certain rules regarding its level of purity and can come in coins or bars. The reason it is categorized as a self-directed IRA is that you get to decide what you invest your money in.
Why People Choose This Investment Option
These are the main reasons why people choose this investment option:
- To protect money from inflation
- To keep savings safe during market drops
- To spread risk across different types of investments
- To hold real, physical assets
Gold has a long history of maintaining value. It doesn’t disappear like paper money does when the market crashes. This is why smart investors pick this option.
How to Start a Precious Metal IRA
It’s important to mention that gold is not the only precious metal you can invest in. You can also invest in silver, platinum, and palladium. This is why this investment is also called a precious metal IRA.
To start your account, you need to follow certain steps. The first thing you need to do is choose a precious metal IRA company. This company will be responsible for setting up your account. Make sure that the company you choose is approved by the IRS.
The next step is to choose a self-directed IRA custodian. This person will take care of your account. Bear in mind that you can’t keep the precious metal at home; it needs to be kept somewhere safe. You also need to choose the funding method.
There are different commodities you can choose from, so you need to pick the precious metal you prefer. Also, you need to decide whether you want bars or coins. Once you’ve made your selection, the custodian will go ahead to buy and store the asset.
IRS Rules You Need to Know
Precious metal IRAs are subject to strict rules from the IRS. You can’t just get an asset and put it in your account. Remember these important points:
- Gold must be at least 99.5% pure.
- Silver must be at least 99.9% pure.
- Platinum and palladium must be at least 99.95% pure.
- You can only use IRS-approved dealers, custodians, and depositories.
- There are age rules for withdrawals that you must follow. There may be penalties and taxes if you take money out early.
You can click here to read answers to different questions about precious metal IRA rules provided by the IRS.
Types of Precious Metals You Can Invest In
There are only certain kinds of metals that are allowed.
Here are some examples of coins and bars that are accepted:
Gold Coins and Bullions:
- American Eagle
- Canadian Maple Leaf
- Australian Kangaroo
- British Britannia
- Austrian Philharmonic
Silver Coins and Bullion:
- American Silver Eagle
- Australian Kookaburra
- Austrian Philharmonic
Platinum and Palladium:
- Canadian Maple Leaf
- Australian Koala
- American Eagle
All of these have to be pure and come from approved mints.
How the Gold Is Stored
When you buy the precious metal, it should be placed in a special storage place.
The asset can be stored in two ways:
- Segregated Storage: Your gold is stored separately from others.
- Non-Segregated Storage: Your gold is stored with the gold of other people.
Having segregated storage is what most people choose because it keeps things simple. The asset must always be kept in a depository approved by the IRS. As we said earlier, it can’t be kept in your home or a safety box.
Cons of this Investment
The pros of this investment are listed in the “Why People Choose this Investment Option” section of this article. This section focuses on the disadvantages of this investment option.
- No interest or dividends: It doesn’t pay you anything while you hold it.
- Setup and storage fees: You’ll have to pay for account management and storage.
- Rules and limits: You have to follow the IRS’s strict rules.
- Not for short-term gains: It’s best for long-term savings and not quick profits.
Experts suggest that you shouldn’t put more than 10% of your retirement savings into this IRA. This is because of the investment’s long-term nature. With this approach, you can invest in other areas and not tie down all your savings. You can visit https://www.dummies.com/ to learn more about retirement investments.
Is a Gold IRA Right for You?
This is not a “yes or no” answer. Rather, the answer depends on your goals. If you want to protect your savings from inflation, it might be a good choice. On the other hand, if you’re looking for fast profits, then it’s probably not for you.
To decide, ask yourself these questions:
- Do I want a stable, long-term investment?
- Am I worried about inflation or drops in the market?
- Am I okay with not getting dividends or interest?
- Can I follow the rules set by the IRS?
- Can I wait until it’s time to withdraw?
A gold IRA might be a smart move if you said “yes” to most of the above questions.
Things to Do Before You Start
Here are things you should do before you open a precious metal IRA:
- Do your homework: Not all companies are honest; therefore, check out reviews and verify their licenses.
- Get your gold IRA kit from a provider you can trust. The kit will show you what to do.
- Check for IRS approval: The company, custodian, and depository must all be IRS-approved.
- Find out about fees: You should know how much you’re paying for service, setup, and storage.
- Invest just a part of your money: Gold should only be a part of your plan for when you retire and not your entire retirement plan.
Conclusion
When other investments are shaky, a gold IRA can help keep your money safe. It gives you real gold that maintains its value over time. A precious metal IRA can be a great way to save for retirement if you follow the rules and plan ahead.
