Is a Gold IRA the Right Investment for Your Retirement Savings?

Sunday, June 16th 2024

People have come up with a lot of different options for saving for their retirement. Some of them have been brilliant while others have been questionable. Have you ever thought about investing in gold as your retirement savings? Probably not.

Why would gold be the right investment to save for your retirement? Today we are going to take a look at using gold as your retirement platform. Starting with explaining what a gold IRA is in the first place and then exploring why it might be the right retirement option for you.

An IRA, or Individual Retirement Account, is a traditional retirement option that involves investing in stocks, bonds, and other options. IRAs typically come with tax benefits, such as tax not being deducted until you start to withdraw money at retirement. At the same time, they have penalties for most withdrawals that happen before retirement.

Gold IRAs are very similar to traditional IRAs, with one major difference, the gold IRA involves investing in physical gold instead of stocks, bonds, or other items that are not physical. Many of the people who want to have gold IRAs desire them for the fact that they invest in a physical object that has a real value.

Where Does Gold Get Its Value?

By this point, you are probably wondering how gold gets its value. When the demand for gold goes up, that raises the spot price of gold. Then those who are holding gold in IRAs are put in a position to get large profits. It is a relatively simple concept but where it gets complicated is predicting the fluctuation of prices.

Gold is mined from the Earth and there is only so much of it to be harvested. Beyond its values as a currency, it also has uses in other areas, such as in electronics. The versatility of gold and the fact it is the oldest currency in the world, give it the value that it has today.

Gold Out Performs Stocks

While it hasn’t always been true, gold in recent years has been doing very well. For about the last 12 to 13 years, gold has been outperforming stocks. Mostly in the Dow Jones. This is a historical pattern. Whenever the economy starts to do poorly, the value of gold goes up. The reason for this is the fact that gold retains its value while stocks don’t have a fixed value.

But what if the market is neutral or doing well when it is time to retire? No matter what, gold has a high value. It also historically does not take a long time for it to increase in value. Very rarely does gold dip below the value you purchase it for and if it does, it rebounds rapidly as it is a precious commodity.

Market Crashes and Depressions

Like we mentioned above, gold does well when the economy is not doing well. That means that during a market crash or depression, your money is secure. This is a good reason to invest in gold or other precious metals. Investing in a gold IRA helps to further secure that investment while giving you the tax benefits.

Something important to consider here is that COVID and other events around the world are making the market very uncertain. Many experts are expecting another crash similar to those we experienced in 1999 and 2007. Investing in gold is one of the ways you can secure your wealth from such a crash.

You Can’t Print Gold

Around the world, governments are constantly printing new cash. That includes printing new dollars in the United States. The more that a government prints cash without taking bills out of circulation, the less the value of the bill is. Such a scenario is a perfect example of the problem with currency that holds no physical value.

This is where gold comes into play. Gold has a value under any circumstance because we can’t just make more gold. Further, the supply of gold around the world is limited. For this reason, gold holds its value and often increases in value.

Opening an Account

Gold IRAs should be sounding like a pretty good option about now. You are investing in your future and also protecting your future at the same time. How do you go about getting a gold IRA account? There are a couple of options.

The first option to starting a gold IRA account is to fund it yourself with a chunk of money that you have available. This can be a straight forward way to get an account started. There are certain limitations that you will have when it comes into how much you invest and the minimum investment. Such limitations can be discussed with a finanical advisor or you can find more details about them when you are setting up your account.

Not everyone has enough money laying around to start a gold IRA account. Or any IRA account for that matter. Another option is to take your existing IRA account and roll it over into a gold IRA account. This is a process in which the existing accounts funds are transferred over to a new account. As long as all of the funds are transferred and not withdrawn, the tax benefits stay intact and you will end up with a solid retirement account.

In addition to having the option of rolling over an IRA into a gold IRA you can also rollover a 401(k) and some similar accounts to a gold IRA. However, when it comes to other types or retirement accounts the tax benefits/penalities may vary.

Storing Your Precious Metal

The process of setting up a gold IRA isn’t as simple as a traditional IRA. Instead of having to just invest in stocks, you need to invest in approved gold that is then transferred to your IRA account. Physical gold is a precious commodity and storing it at your home is unsafe. It is also against the rules of having a gold IRA.

Precious metals that are invested in an IRA of any kind must be stored with an approved storage facility. These facilities take the responsibility of protecting your gold from both theft and the environment. If you buy your gold from a company that is used to setting up gold IRAs they will typically already work with a storage facility. This can simplify the process but it is highly recommended that you do at least a little research into the facility they use to ensure that you can trust them yourself.

Starting on The Journey of Gold IRA Investment

It is important to be an informed investor. You do not want to walk in with only minimum knowledge to something that you are investing money in. This is especially true when you are investing in your retirement. We highly encourage that you continue reading about gold IRAs and see more of why they are a great option for retirement investments.

Something else to keep in mind is that it is a wise idea to diversify your investments. You should never have all of your investments tied up in one area. By diversifying your investments you are protecting them against any changes and problems in the future. Gold IRA can make a great secondary retirement account or a great primary account for those that want to have multiple options for retirement savings.

Don’t leave yourself exposed to the changes that come in the market, especially at a time that has so much uncertainty. Start looking at the best gold IRA companies today. You will be starting down a path that can help you to be a responsible and safe investor.

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