Almost any type of investment is allowed in an IRA, including stocks, bonds, mutual funds, pensions, mutual funds (UITs), exchange traded funds (ETFs), and even real estate. One of the ways to invest in gold is with a gold IRA. IRAs are retirement accounts with attractive tax benefits. While regular IRAs hold investments such as stocks, bonds, and mutual funds, gold IRAs hold, you guessed it,
physical gold.
This makes them an easy way to add gold to your investment portfolio and also enjoy some tax benefits. You must buy the gold from an approved dealer or safe and all the gold must be stored in an IRS-approved depot. Second, adding gold to your retirement portfolio can help diversify your investments and reduce overall risk. Other companies require you to buy your investments from a separate precious metals dealer and then tell your custodian bank to buy the items on your behalf (using your
IRA funds).
Regardless of which method you choose to invest in gold, it’s important to do your research and understand the risks associated with each type of investment. Gold IRA rules require that you store eligible precious metals with a national depositary, bank, or IRS-approved external trustee. Depending on the custodian bank you use for your physical gold IRA, you may also be able to invest in other types of metals, such as silver, platinum, and palladium. Given that the stock market typically rises by around 7% in an average year, it would be rare for a gold IRA to outperform other retirement investments
.
Investing in ETFs allows you to become familiar with the price of gold without having to buy and store physical gold. You must then buy gold coins or bars from a reputable dealer and have them stored in an approved depot. The schedule in which you start using the required minimum distributions (RMDs) from a traditional gold IRA depends on your age or the year you were born. Self-directed IRAs can be either traditional IRAs or Roth IRAs, and the difference is how you want to tax your money
.
Once you’ve opened a self-governing gold IRA, you can transfer cash to the account to fund your purchase of physical gold. According to Brett Gottlieb, a financial advisor and founder of Comprehensive Advisor in Carlsbad, California, you should first consider whether you want to make a physical investment in your portfolio and not a stock or investment fund from gold companies or an exchange traded fund (ETF) that tracks a gold index. This is a type of IRA that the investor manages directly and is allowed to own a wider range of investment products than other IRAs. When gold rises, you must also decide whether you would buy at or near the top of the market if you invested at that time
.
Some IRA companies guarantee to buy back the gold from you at current wholesale prices, but you could still lose money if you close the account, which is not usually the case when opening and closing regular IRAs.
