Should Gold Be in an IRA?

Many investors view gold as an effective hedge against inflation and as an asset diversifier in their portfolio, however owning physical precious metals in an IRA requires specific funds and follows strict regulations.

Investors typically work with precious metal dealers and custodians to purchase bullion for storage at an IRS-approved depository, although their services can become quite costly over time.

Why Should You Consider Gold?

Gold investments provide an effective means of diversifying retirement portfolios and may serve as an inflation hedge; gold typically increases in value when its US currency counterpart declines in value.

Investment in physical gold requires careful thought. First and foremost, it is vital that you educate yourself through independent sources (not gold IRA companies who may have an ulterior motive in selling you such an account).

Once your retirement account is established, the next step should be opening an individual retirement account with an approved custodian and selecting an IRS-approved depository to store gold and silver. When making these decisions, make sure to take into account all fees associated with using each custodian, dealer and depository as you compare costs; additionally, determine whether you prefer full service or self-directed options when selecting an IRA provider.

It’s a Safe Investment

Gold can serve as an invaluable asset diversifier, offering protection from inflation and helping preserve wealth during times of geopolitical and economic instability. Gold’s performance during times of geopolitical strife and economic turmoil speaks for itself.

As gold is an inert asset that does not generate any returns, investors should carefully consider its place within their portfolios. In general, holding gold should make up only a relatively minor proportion of total assets.

Gold can be purchased physically as bullion or coins, but you might also wish to explore options like an ETF or shares of gold mining companies. Traditional or Roth IRAs may provide tax-deferred growth while some individuals such as small-business owners and freelancers may have the option of setting up SEP or SIMPLE IRA accounts. Determining which option best meets your financial goals, risk tolerance and time horizon is ultimately up to you.

It’s a Commodity

Gold fits the definition of a commodity by being easily traded and exchanged for other goods and services, while also serving a unique function in society as a store of value and safe haven investment during volatile times.

Although gold does not currently serve as a formal currency (due to its rarity and lack of coins), governments, central banks, financial institutions and individuals still hold gold as an investment that provides safety against unpredictable economic and geopolitical events and supports an increase in its price.

Many investors access commodities through broad-based indices that typically include gold in their weightings; however, this only gives limited exposure. Implementing an outright or supplemental gold position in one’s portfolio reduces risk without diminishing long-term expected returns; adding just 2- 10% allocation could improve overall portfolio diversification significantly; gold has outshone most individual commodities and major commodity sub-indices over recent years.

It’s Tax-Free

One of the primary considerations when investing in gold is tax liability. The Internal Revenue Service will tax any profits on financial assets such as gold that generate profits, including potential capital gains tax liability.

The IRS classifies physical coins and bars as collectibles that are subject to tax at a maximum rate of 28%. Conversely, investments that don’t buy physical gold such as mining companies or derivative markets could qualify for standard long-term capital gains rates of 15%-20% for most investors.

Many individuals save in traditional or Roth IRAs, individual retirement accounts that offer tax-deferred growth on investment earnings. Small-business owners may set up SEP or SIMPLE IRAs for themselves and their employees that have lower administrative costs than 401(k) plans and higher contribution limits than traditional IRAs.


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