First and foremost, let’s explain the meaning of the term IRA. This acronym stands for Individual Retirement Account whereby you are able to put in physical gold or other approved precious metals for your own benefits as an IRA account owner. You need to understand that instead of holding your assets in terms of paper, you are actually allowed to hold them in physical bullion bars or even gold coins
As jewellery, gold is known to shine but when it comes to investment. Its track record is normally a mixed one due to the fact that its return basis has been found to be less when compared to other investment assets classes. In addition, gold is considered to be volatile and cyclical.
Some people may then end up asking is “Are Gold IRAs safe?” Given that there are mixed reactions concerning this topic, some people have ended up asking what exactly are the pros and cons of having a Gold IRA investment and what are some of the Gold IRA investing options. Listed below are answers that may be offered to you if you are thinking of opening a Gold IRA account.
Pros Of Having A Gold IRA
One of the best reason that you should consider investing in gold is the diversification benefits that the precious metal is able to offer. Gold is able to provide a hedge against inflation. In addition, it is also not in any way associated with the stock market.
Having a diverse portfolio is essential when it comes to investments because when it comes to the investment sector, you simply do not want to put all of your assets in the stock market as this will make you vulnerable if your investment doesn’t end up paying off as well as you would have wanted it to.
Instead of you as an investor holding all stocks or having even larger cap stocks, it is better to have several types of investments. As the saying goes, don’t put all your eggs in one basket. Hence, you may want to have investments that tend to compete against each other instead.
It has been found that when the stock market is booming, often times, the price of gold may end up falling as a result. However, when the stock market is failing, it has been found that the price of gold tends to regain its lustre for its investors.
By adding assets to your portfolio that are not in any way aligned with the stock market, you may end up having a stabilizing influence in the event that the market volatility strikes. Most people have been looking into hedging their portfolios as this will help them as an investor feel better when some of their investment ends up being affected by the economy, at least their gold investment will be doing well.
This is psychologically satisfying to you than just counting losses and no profits. Hence, most people are taking into consideration the various Gold IRA investing options as they now look to broaden their portfolios. In addition, by you choosing to have Gold IRA investments in your portfolio, you are also able to liquidate your assets easier when compared to other investments such as real estate among many others.
Cons Of Having A Gold IRA
As much as gold is a very tax efficient commodity, you need to understand that it does not pay dividends when it has been sold back into the market.
However, in a traditional IRA, the tax efficiency may not be needed as the assets are taxed at the normal income tax rates when they have been withdrawn. This then results in you wasting the tax-deferred space for a specific asset that is not in any way going to generate a taxable event.
Are Gold IRAs Safe?
Typically, speaking, the IRA is where you are able to put mutual funds or a huge dividend-paying stock. Then you are able to enjoy the benefit while at the same time not worry about the taxes that may have applied before. The IRA may end up being the safest place to actually own gold because the sale of the gold would then be taxed as a collectable with a rating of 28% in any taxable account.
In addition, the sale of some Exchange-Traded Funds (ETFs) is normally taxed as a collectable outside of IRAs. As it is all dependent on how exactly the fund is able to invest in gold. You need to understand that gold would be better and safer in the IRA than outside as it is all about rewards and risks, and costs and benefits. There really is no right answer with regard to the safety of investing in gold IRA as it is a gamble in many ways than one.
The Fine Print
You are normally advised that in order for you to be able to keep the gold coins within the IRA account and put them in a bank as well, you must first open a limited liability corporation i.e. LLC. Most of the time, your service provider is able to do this and just simply set up the LLC. In addition, the IRA LLC may end up needing a checking account in order for one to be able to make transactions. If one ends up deciding that they would rather keep the gold in the bank, then they will need a safety deposit box under the name of the IRA LLC.
While other custodians may end up having different fees, the bottom line is the fact that a self-directed IRA is at the end of the day going to cost more when compared to the IRA going through a credit union or bank or Mutual Fund Company or a brokerage.
For any investors who may want to put into the account physical gold or any other optional investments that are allowed by the IRS, then any additional cost may end up being very worth it. Hence, gold IRA investment is normally a gamble but it does pay off.
We feel it is a good thing to add gold to your investment portfolio as it is both rare and very different in terms of investment options.
Our personal recommendation to safeguard your future with gold is to contact Regal Assets, The #1 Rated Gold Investment Company 7 years in a row, Click Here To Request A FREE Gold Investors Kit.