Should You Get A Gold IRA?
The reason why gold IRAs appeal to so many investors is because they provide the opportunity to diversify a retirement portfolio.
11:46 26 July 2021
The reason why this is the case is due to the fact that the price of gold tracts in the opposite direction to paper assets, such as fiat currency and stocks / shares, and so provides something of an insurance policy should there be a bout of inflation. Having a diversified portfolio is a balanced approach to smoothing out risk in the long term, thus making it the ideal choice for retirement portfolios, such as IRAs.
The increase in the popularity of gold IRAs came off the back of the 2008 global financial crash, as investors looked for more stable investments. An increase in the sales of gold along with the emergence of more gold IRA companies that were able to manage and simplify the transactions all of a sudden saw the process of investing in a gold IRA so much easier. A list of the Best Gold IRA Companies in 2021 can be viewed via the link.
The golden rules
When it comes to gold IRAs, they can either be Roth or traditional options. Regardless of the version used, gold IRAs can only be used for investing in physical gold, such as bullion, coins, or jewellery. With this in mind, it is important to think about if you want to have physical gold investments in your portfolio or a gold mutual fund or company stock, or even an exchange treated fund which is tracked against a gold index.
If opting to invest in actual, physical gold, then there are certain criteria that apply in order for it to be held in an IRA. For instance, in order to invest in gold bars or coins, the IRA must be held by a trustee rather than the owner and needs to meet certain IRS fineness standards. The physical gold is required to be stored in a depository that is fully IRS approved.
This means that the coins or bullion cannot be stored in safety boxes, closets, or a safe within your home. All the rules relating to IRA taxes, disbursements, and contributions still apply.
The golden risks
Investing in any type of asset comes with both rewards and risks, with gold being no different from this. In lots of ways, gold IRAs come with all of the same risks that other investments have. As has been the case over the years, the price of gold has gone both up and down - no one is able to accurately predict where it will go next.
However, despite of this risk, this should not put you off of investing in the previous metal. After all, gold has a long history (approximately 5,000 years) of being a good store of value. Whilst the price of stocks can fall to zero and currencies can quickly become pretty worthless, gold will never not have any value to it. That is not to say that investing in gold does not come with any risk.