We are seeing more people invest their retirement portfolio in precious metals. With an increasing amount of the population investing in gold, we wanted to take a look at whether or not investing in gold is a good idea for your retirement savings.
Investing in Precious Metals
We have seen our customers looking to move their retirement investments from a traditional investment portfolio of stocks and bonds. Moving to precious metals or physical gold, including gold coins or gold bullion, has helped all of our customers to avoid drops and crashes in the stock market.
You can begin investing in precious metals with a self-directed IRA and move other assets to a gold investment. This can be an extremely valuable investment rather than keeping money tied to a retirement account.
Pros and cons of investing in Gold
As with any retirement strategy, there are positives and negatives to having a retirement investment in precious metals. Although we will outline some below, it is always best to discuss any personal finance retirement investment with a financial advisor to ensure that you understand what you are doing when you invest in gold. This will also ensure that you get the market price for any precious metals you are buying.
Pros
- Gold prices tend not to fluctuate in the same way as traditional retirement investments meaning you will have a bigger retirement nest egg if you buy gold bars or other types of precious metals.
- Gold investment is unlikely to be affected by inflation as mutual funds will be. This means that if you have your investments in a gold IRA or other precious metals such as silver coins, you will receive more for your investment when withdrawing.
Cons
- There is often a much higher minimum investment to begin a precious metal or gold IRA, so this option is not suitable for those on a lower income.
- Precious metal investments are a newer form of an individual retirement account, and so there are not as many companies offering this as there are other retirement account types. This means that you will need to do your research into the companies before you invest in gold, making this a slightly longer process than other investments.
It Is More Secure Than Other Retirement Investments
As we have highlighted above, investment in physical gold and bullion coins is a more secure type of investment than holding your retirement investment in a bank account or other alternative investments. This is due to the price of gold being generally more stable than other investment types.
Gold's price is also less prone to being impacted by market fluctuations or an economic crisis than a mutual fund.
Figure Out How Much you Want to Invest in Gold
Many investors will begin their investment in gold by reviewing how much they can afford to invest in this type of retirement plan. However, we find that it is best to check the minimum value you could invest in the companies you are considering before deciding.
This will allow you to see if you need more money before making your decision.
Choose an IRA
When you begin to choose a gold IRA, there are several considerations for your IRA custodian. You should consider if they have a good track record for investments, if they charge additional costs or storage fees, and what type of insurance policy they have in place.
You may also want to consider which precious metals they offer and if the investors choose where the money they invest is placed. It is best that you also check the minimum investment amount to ensure that you have enough money outside of any stocks that you hold to invest in gold, silver, or any other precious metal.
The Shifting Price of Gold
Price changes affect all forms of investment, including gold and silver. However, the money you have invested in gold and silver will shift considerably less than stocks held on the stock market. This is because gold and silver are seen as more stable forms of investment and are not impacted by company performance in the same way as stocks are.
The value of stocks can fluctuate in the day and change depending on numerous factors for the company you have stocks with. The value of silver and gold is more stable long-term which is the reason investors are turning to this form of investment.
How to Invest in Precious Metals
If you are considering investing in gold or other precious metals, you should first decide the value of the investment you would like to make. Next, you should discuss this with your financial advisor to ensure that you understand how the investment will work.
Once you are sure of the investment you will be making, you should contact an investment company to being the process. We have highlighted several companies that we know have purchasing power currently and that we would recommend for investments in gold.
Whichever company you choose will then take you through its process to ensure you have an investment you are happy with.
Different Types of Gold Investments
There are several types of gold investments available currently. It is best that you choose which is the right investment for you before entering into discussions with an investor. Since the gold rush, there has been value in owning gold, and gold has been seen as a safe investment for retirement funds.
However, as more people invest in gold, the price of owning gold bars, coins, or bullion outright has increased. If you have the funds to own gold outright or to invest large sums in this type of asset, then you may not be interested in other types of gold investment.
If you are not able to afford to own gold bars outright, you may be interested in electronic gold in which you can own a part share with other investors. This does carry risk, so we advise that you fully research and discuss all types of gold investment and seek independent advice, as needed, before making your investment.
Cons Of Investing In Gold
Investing in gold does not mean you will have physical possession of the gold in a safety deposit box, as you can choose to mutually invest in gold. However, we recommend that if you are taking possession, physically, of your investment that you store this in a secure and smart way.
Gold for retirement is a way of investing your money, and the price of gold can be impacted by natural disasters and political turmoil. Also, it can be stolen as with any other physical possession, so you should make an informed decision regarding storage and the additional fees this will lead to if you take possession of your investment.
Fund Your Account With Cash or Transfer Existing Assets Into It
If you have an existing retirement account in mutual funds, stocks, or other investments, you may choose to transfer this into your gold IRA investment. However, if you are looking to diversify your investment portfolio and have other funds to finance this with, you can use a cash investment to get you started.
We recommend having a diverse portfolio of investments as, in the event of market changes, you are more likely to be left with a larger amount of your original capital.
Consider Taking Some Profits Off The Table After a While
If your investment is regularly making a profit, it is beneficial to withdraw some of this profit when you feel comfortable doing so rather than re-investing it. You may wish to wait until your profit has reached a certain amount before withdrawing, and do remember you will pay taxes on the profit.
Gold IRAs: A Growing Trend
For all of the reasons above, gold IRAs are increasing in popularity. The best thing about this is that information about investments in precious metals is more accessible than ever before. You can conduct a wide range of research yourself to decide if this is the best thing for you.
Pros and Cons of Gold IRAs
Although there are several pros and cons of having your retirement funds in gold IRAs, it is important that you make the right decision for yourself. Each company that we recommend has a list of pros and cons on our website to help you to decide which company is right for you.
Investing in Gold Can Help You Diversify Your Retirement
Having a diverse retirement portfolio is the best way to protect your retirement. Tying all of your investments into one asset class is very risky if something were to happen to that type of asset.
Gold's Special Risks
The risks associated with gold, specifically, include the availability of gold to buy, as the increase in popularity will impact this. There is also the global political and economic situation at the time of and during your investment which will impact the value of the gold.
Should You Invest in a Gold IRA?
We highly recommend investing in a gold IRA if you are able to. You should always seek independent financial advice if you are unsure.
How Do You Buy Gold in an IRA?
You can choose to set up a self-directed IRA through a SDIRA custodian, such as Equity Trust Custodian or Millennium Trust Company, who has a working relationship with a Gold IRA company, such as Augusta Precious Metals, Goldco, or Birch Gold Group to arrange your IRA-approved gold deposits into the self-directed IRA, and assets transferred to an approved Gold Depository. Although your gold will be held in a secure depository, you own the gold yourself.
Alternatively, you can enter into a mutual fund investment where you will pay less but not physically own the gold yourself. This is known as a paper asset gold position. You should discuss with the investment company which is best when setting up your investment account with them.
Risk Disclosure: Any investments into alternative assets, including precious metals, such as gold, silver, platinum, and palladium, come with an inherent risk, where you could end up making less money than what you put in. Before investing your hard-earned cash, be sure to speak with licensed professional financial advisor first. Always remember that past performance is not an indication of future returns.
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