Every smart investor knows that they shouldn’t put all of their eggs in one basket, especially when it comes to retirement. A diversified portfolio is always a safer bet, no matter a person’s other financial priorities. These days, more people than ever are diversifying their retirement funds by purchasing gold IRAs. This article will offer a brief introduction to the concept and how to get started.
Self-Directed Gold IRAs
The most straightforward way to invest in gold to diversify a retirement portfolio is to use top rated providers to add gold to a self-directed IRA. Self-directed IRAs are unlike other types of retirement accounts in that they allow people to invest in certain precious metals, including gold.
The first step toward opening a self-directed gold IRA is to find a custodian who is approved by the IRS to manage this type of retirement account. From there, simply open the account and fund it with cash or money transferred from another qualified retirement plan
Once the account is open, the holder can choose which gold bars, bullion, or coins to purchase, just so long as they meet IRS standards. Remember that the IRS prohibits the use of collectibles in gold IRAs, which would mean that purchasing those items would count as distributions. When in doubt, ask the account custodian or precious metals dealer for advice.
Investing in Gold Securities
The second option is less popular, but it’s worth mentioning. Some people use their existing traditional or Roth IRAs to invest in gold securities. This approach is different in that it doesn’t involve purchasing physical gold. Instead, account holders invest in gold futures, ETFs, stocks, or mutual funds. This approach doesn’t offer quite the same level of portfolio diversification as purchasing physical gold, but it’s still a good way to hedge against inflation.
What to Keep in Mind
Starting a gold IRA is a good way to diversify a retirement portfolio, hedge against inflation, and engage in an interesting new form of investing. However, like any type of investment, it comes with some risks. In this case, the primary risk is that of fraud.
The Securities and Exchange Commission has indicated that there are scammers out there who try to take advantage of people’s lack of knowledge about self-directed IRAs, including gold IRAs. The problem is that people aren’t allowed to act as custodians of their accounts. Since account holders aren’t allowed to purchase the metals themselves or store them at home, they must pay careful attention when choosing a custodian.
Is a Gold IRA Worth the Hassle?
While it takes some extra work to open and fund a new account and choose a reputable custodian, gold IRAs are worth the extra work. They give investors an extra source of security and a way to make sure that they aren’t missing out on any kind of chance to diversify their portfolios and ensure a stress-free and well-funded retirement. Just be sure to do some research first and choose a reputable gold IRA service.