With so many well-documented advantages of investing in gold, the decision to open a gold IRA account is an easy one. What is difficult for most investors is the actual process of buying physical gold as part of a self-directed IRA.
However, the reason why some investors struggle with creating gold IRAs is not because of the complexity of the process, but because people do not take the time to research all they can about setting up and managing a precious metals IRA.
If you have been seriously considering a gold investment as a viable option for creating a diversified retirement portfolio, you are in the right place to get all the knowledge to need. This article will make the process of owning physical gold as easy as ever, so read on for more life-changing financial advice.
Key Takeaways
Benefits of investing in gold
What makes a good gold IRA company
Five steps to starting a gold IRA
Benefits of Investing in Gold and Other Precious Metals
When most people think of the best ways to invest for their retirement, they usually think of a 401(k), Roth IRA, or paper assets such as buying an exchange-traded fund.
However, there are a lot more options available to investors in the form of gold investments. With the recent upsurge in the stock value of gold mining companies, there is no better time to invest in gold than right now.
Precious metals, such as physical gold, silver, platinum, and palladium bullion, have a wide range of benefits that investors can exploit, such as:
In such times when inflation is on the rise, owning physical gold will protect your retirement account because it acts as a hedge against inflation
There is a huge demand for gold bullion around the world from governments to financial institutions
Historically, gold prices have always done well in times of economic turmoil
Gold and silver have actual value in various industries, such as medicine and technology, which will help keep the value of gold mining stocks high
Unlike mutual funds and other paper assets, it is easy to sell gold and silver in times of emergency to get some extra cash
Qualities of the Best Gold IRA Companies
Before you purchase gold, the most important thing you have to decide is which gold IRA company is going to manage your self-directed IRA for you.
Make no mistake, in an industry as lucrative as the precious metals industry, there will be a lot of scammers looking to take advantage of inexperienced investors.
To avoid falling victim to one of these fraudulent companies, you need to be able to identify a trustworthy gold dealer or custodian when you see one. The following are some of the qualities you should look for buying physical gold or opening a self-directed IRA:
Reputable gold IRA companies have customer reviews to back them up. Pay close attention to any positive reviews that are made about the company.
The company should be endorsed by reputable platforms, such as the Better Business Bureau or the Business Consumer Alliance.
All dealings regarding buying gold or opening gold IRAs should be done in complete transparency.
The gold IR company or gold dealer should be licensed by the IRS to manage retirement accounts or to trade in precious metals.
Insurance is a must because gold is a valuable commodity with a high risk of theft.
Avoid pushy sales tactics that try to pressure you into making a quick decision.
Starting a Gold IRA in Five Simple Steps
Are you ready to diversify your retirement account by opening a gold IRA? Here are five easy-to-follow steps to help get you started:
Research Gold IRA Regulations
Bear in mind that there are a lot of IRS regulations regarding owning gold in an IRA that you need to consider. One of these rules states that you are not allowed to keep physical gold on your own, you will need to work with a gold IRA custodian who will find a suitable IRS-approved depository that you can use.
There are also a lot of tax regulations that determine when and how much you will be taxed for the funds in your gold IRAs. Usually, the account works like a Roth IRA, in that it is tax-deferred, so you will be taxed when you make your withdrawals and it will be added to your income tax.
Choose a Reliable Custodian
We cannot emphasize this enough. Without a reliable custodian, it will be very difficult to make any money from your gold IRA. There is a lot more that goes into managing a gold IRA than just buying gold coins or bullion and waiting for the value of gold to go up.
If you are unsure of who should be managing your retirement account, approach your financial advisor for help. There are some well-known names, such as Augusta Precious Metals and Noble Gold where your self-directed IRA will be in safe hands.
Duties of Gold IRA companies
The following are some of the services your gold IRA custodian will provide for you:
Your custodians will help with the gold IRA setup process. You should expect to pay a small setup fee, as well as sign a lot of paperwork before your account is up and running
They will help you determine the best way to fund your account as well as act as your financial advisor if you are not sure how much you want to diversify your gold IRA
The gold IRA custodian must handle the transportation of your gold purchases, as well as ensure that they are stored in an IRS-approved depository
Fund your Gold IRA Account
The next important decision that you will need to make is how you are going to fund your account. There are two main ways of doing this, either by initiating a gold IRA rollover or by doing a direct transfer.
Gold IRA rollovers have the advantage of being the safer and cheaper option. All you will need to do is approve the amount you want to rollover from your 401(k) or traditional IRAs. Your current custodian and your gold IRA custodian will handle the rest of the process.
A transfer is the preferred option for many businesses or self-employed individuals without access to a 401(k) or Roth IRA. The only way for them to invest in gold is by transferring funds directly from their bank account to the gold IRA.
Select Your Precious Metals
There is a wide selection of precious metals to choose from, so even if your intention was just to invest in gold, you can mix in some silver, platinum, and palladium too. This will give your gold IRA account a lot more protection in terms of risk.
IRS-Approved Gold and other precious metals
Not all types of precious metals are IRS-approved for inclusion in a self-directed individual retirement account. The IRS requires that your gold coins and bullion bars be of not less than 99.5% purity.
There is also a comprehensive list of the bullion coins that are approved, be it gold, silver, platinum, or palladium, such as:
Canadian Maple Leaf coins
American Eagle Bullion or proof coins
Australian kangaroo coins
Pay Relevant Fees
Finally, once your account setup is complete, there are a lot of fees charged by your IRS-approved custodian that you should expect to pay, such as:
Account setup fees
Custodial fees
Annual fees
Storage and insurance fees
Final Thought
If you have traditionally been focused on paper assets, such as the stock market, mutual funds, and exchange-traded funds, maybe it is time to look at other great opportunities in the form of owning physical gold.
The process itself is easy, and with the right advice from financial services firms and reliable gold IRA custodians, you too can reap the many benefits of having a gold IRA.
