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Should You Invest in a Gold IRA?

Should You Invest in a Gold IRA? 1

Choosing the right investment opportunities to support your future can be an overwhelming process. Ideally, you want to find the best balance of risk and returns to create a stable nest egg for your future. While every investor has unique resources and tolerances for risk, there are many proven options to guide the decision-making process.

Gold IRAs are becoming an increasingly attractive long-term investment option. Here’s what you need to know about gold IRAs so you can determine whether this investment is right for you.

What is a Gold IRA?

A gold IRA is an individual retirement account that focuses on gold and other precious metals rather than cash, stocks, etc. With this process, you’re buying physical pieces of gold, such as coins or bullion. Alternatively, you may invest in silver or platinum, but these metals fall under the gold IRA label for simplicity’s sake.

Benefits of a Gold IRA

There are several benefits to a gold IRA that make it appealing to many investors. Here are the top three advantages of investing in a gold IRA.

Simple Rollover Process

One of the benefits of a gold IRA is the simple process in rolling over existing investments into this format. So, if you already have an eligible IRA account, you can check out The process is similar to transferring funds from traditional investment accounts, requiring some paperwork and meetings.

Both Roth and regular IRA and 401(k) accounts are eligible for a gold rollover.

Low Risk

Gold is generally considered to be a low-risk investment, thanks to its strong history and growth. The value of gold has increased by over 330% over the past 15 years. As gold is a finite resource mined from the earth, its value is expected to continue its meteoric rise over time.

Portfolio Diversification

The primary reason investors look into gold IRA accounts is for portfolio diversification. This is a great way to expand your portfolio with minimal risk. Additionally, gold is treated as a long-term hold, which is ideal if you’re staggering your investments.

Downsides of a Gold IRA

As with any type of investment, the gold IRA has a few downsides. Here are the biggest strikes against this otherwise positive investment strategy.

Can’t Use Existing Gold

If you already have gold and precious metals, this may not be the option for you. Unfortunately, you’re unable to transfer gold that you’ve already acquired into a gold IRA. So, if you’re looking at this option to maximize your existing precious metal assets, a gold IRA isn’t an option.

No Tax Advantages

Another significant downside is the lack of tax advantages. You won’t receive interest and dividends on gold. While your investment is sure to gain value over time, you won’t reap those rewards until you sell. This issue, in particular, has led to stocks and bonds having more cumulative value.

Higher Fees

There are more fees associated with brokering and storing gold in comparison to managing cash, stocks, and bonds. Like any commodity, precious metals tend to have a mark-up. Additionally, you’ll also require a broker to manage the sale and a custodian to manage your account. While a gold IRA is self-directed, the physical nature of this commodity creates some complexity in the process.

The gold must be stored in an approved facility— not in your safe at home.

Is a Gold IRA Right for You?

A gold IRA is worth considering if you’re interested in portfolio diversification through alternative investments. It has low market volatility and proven value over the centuries. Discuss your options with your financial advisor to see if a gold IRA has the potential to maximize your investments based on your long-term financial goals.

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