There are some people who believe investing in gold and other precious metals is critical to survival if the global economy faces trouble. Well, it’s facing trouble now as the world is fighting the coronavirus pandemic. And, in times of crisis, gold and other precious metals may, indeed, present a universal form of currency. That’s why many individuals do invest in precious metals—gold in particular. But, if you’re simply looking for a way to build wealth for retirement, gold IRAs are an excellent way to invest.
With the coronavirus outbreak across the globe and governments scrambling to take measures to contain it, gold and even silver prices are dropping. Silver prices are at the lowest since 2009. And, even though gold is considered a safe-haven asset, it’s also being sold as investors make what some call a “dash for cash.” So, if you’ve been waiting for the cost of gold to drop—well, it has. And, it’s continuing to drop as this article is being written. With that in mind, and considering the current state of the stock market, you have an opportunity to invest in a tangible asset at relatively low prices and to use that strategy to secure your financial future in retirement.
Now, our thoughts here are not meant to facilitate doomsday theories or to incite fear in your heart. We just think it’s important you know how alternative investments like gold can add diversity to your portfolio. We understand and support the need to take cautionary financial measures right now. But we believe we also need to keep an eye on our financial security in retirement, too. Some people may be perfectly positioned to open gold IRAs, and if that’s you, read on to find out how it works.
What Are Gold IRAs?
Gold IRAs are self-directed retirement plans that allow you to invest in gold and other precious metals. It’s not hard to do, provided you know the rules to invest. Precious metals in your portfolio can help you create appropriate diversity and allow you the potential to score tax-sheltered gains if you decide to sell when gold prices start to rise.
How gold IRAs work
- Self-directed IRAs that invest in gold are commonly called gold IRAs, but these accounts can also invest in other precious metals such as silver, platinum, and palladium.
- Your IRA purchases the asset, and it’s titled in the name of the IRA.
- Precious metals must be physically held in a depository in your IRA’s name. This protects the tax-advantaged status of the assets.
- Some IRA custodians, like Advanta IRA, have depository facilities for precious metal storage.
- Not all precious metals are permissible assets in gold IRAs.
- If you decide to sell any precious metals owned by your IRA, all income is deposited directly into the account on a tax-sheltered basis.
- You can take a distribution of your precious metals—but if you do so before you retire, you’ll pay tax and early distribution penalties.
Make Your Investments Wisely
It is critical that you understand the restrictions set forth by the IRS. For example, jewelry cannot be purchased in your IRA. And, anything deemed a collectible by the IRS is not permissible. Also, only certain types of coins are approved holdings in IRAs. So, make sure you do your research before you invest. You can find a comprehensive list of allowable precious metals in this article published by GovMint. But, you should always check with the proper professional to ensure any precious metals you’re considering are IRS-approved assets.
Our point is that even in times of economic alarm, you can make sensible investments in tangible assets with gold IRAs that have the potential to build wealth for your retirement. Gold especially can provide a hedge of sorts to stock market downturns, as the cost of gold typically rises during these times. So, it’s definitely something to consider. If you’d like more information on investing with gold IRAs, contact Advanta IRA.