Gold is a precious metal that has been used in the past as money. Many wealthy families invested their wealth into gold, to preserve it as gold always held its value and was considered as good as money. Nowadays, investing in a gold IRA is a must. In this article, I will show you how to invest in a gold IRA.
How to Invest in a Gold IRA
What is a Gold IRA?
A gold IRA is an individual retirement account, an account that functions the same way as a regular IRA account however, instead of holding paper assets, it holds physical bullion coins or bars.
Why Invest in a Gold IRA?
There are several reasons to include gold in an IRA account, some of them are:
- To protect and preserve wealth from unexpected events. Covid-19 is the best example here.
- A hedge when the stock market is not expected to do well. For several months there has been a stock market downturn. Thus, most investors have seen their life savings decimated. However, those who had their savings invested in gold are walking the streets with a big smile on their faces.
- Portfolio diversification. It is not prudent to put all eggs into one basket. A smart investor always spreads his/her savings into different types of investments that are not connected. (Bonds, real estate, stocks, precious metals, and so on.)
- The weak dollar. I am afraid the dollar will continue to lose strength. Although the decision by the government to print trillions of dollars is the right decision, it will ultimately cripple the dollar’s price.
- Loss of confidence in central banks. Over the years governments and dirty politicians manipulated central bank policies. In addition, central bankers just watched them without doing anything about it.
- Geopolitical uncertainty. (Middle East, Brexit, ISIS, North Korea, Hong Kong.) Even though ISIS has lost ground, it is still around. The Middle East is in turmoil, North Korea has started creating trouble again, Brexit is postponed and in Hong Kong, the conflict is back.
- The US-China trade war. The US-China trade war is not over yet. In fact, it is turning out to be a financial war between the two superpowers
- Gold has never lost its value due to war, mismanagement, corruption, theft, inflation, and economic and financial crises, while stocks have.
- Gold is a tangible asset that can be converted to cash easily.
- Low or negative interest rates. Most central banks around the world have adopted a negative interest rate policy. That means, your dollar is losing value every single day.
Steps Needed to Invest in a Gold IRA
1-Set Financial Goals for Your Future
It is important for all of us to establish financial goals for our retirement. In my case, am not willing to restrain myself in a lifestyle totally depending on welfare or a small pension. Nobody wants that.
To plan for the future you need to know where you are today, where you want to be, how you are going to get there, and how much is going to cost you. Nothing is free in life.
Your retirement plans could change over time, as your income and knowledge grow. Thus, your plans will need to be flexible in order to adapt to these changes.
2- Choose Between a Rollover, a Transfer, or a Fresh Start.
Once you’ve established your retirement goals, you will have to decide what is better for you. A fund transfer, a fund rollover, or a fresh start with an entirely new Self-directed IRA account.
A rollover is when the money is moved from the current IRA account, perhaps to an account that offers more benefits security, and flexibility, is paid directly to you and you will have to deposit the money in the account that you want. Be cautious there, you will have two months to transfer the funds otherwise your funds will be taxed by the IRS.
A transfer is when the custodian transfers the money directly to the new custodian. In this case, you never see the money and there is no reason for the IRS to tax you as the funds are never made payable to you.
A new Self Directed IRA is also another option. You do not have to close your existing IRA account. In fact, the IRS allows for several IRA accounts as long as your combined contributions do not exceed the annual limit set by the IRS. The process is fast and easy, and your IRA Account specialist will be there to help you every step of the way.
3-Find a Custodian
To have your funds invested in physical gold or other precious metals, the IRS requires you to open an account with an approved custodian. Therefore, you will have to do your own research to find and choose which custodian you want to deal with.
This could be a headache for the ordinary folk but, companies such as Regal Assets are already dealing with the most reputable custodians and can actually take care of that on your behalf. They will actually set up your IRA account and coordinate with your current custodian to transfer the funds.
4-Safe Bullion Storage
According to IRS regulations, you cannot store your IRA precious metals bullion at home. It must be stored in a reputable precious metals storage facility. A precious metals storage facility or depository is a third party that specializes in precious metal security. You can always visit to see and hold your assets at the depository, but as long as they are held in the IRA you cannot take them home.
5-Relax Your Savings are Safe
Once the whole process is finalized you will not have to worry about geopolitical uncertainties, trade wars, financial turmoil, or even the price of the dollar. In addition, a self-directed IRA gives you the flexibility to continue investing in other areas such as real estate or stocks.
Traps to Avoid
Every time there is an issue that involves your hard-earned money, you must be diligent. Fortunately, when it comes to IRA investing, the rules and regulations set by the IRS are strict and there is little room left for any mishaps.
Nonetheless, there have been cases where investors were scammed or cases where due to mistakes, cost investors a great deal of money.
1-Not all gold coins are IRS-approved for an IRA account. If you happen to purchase the wrong precious metals coins your IRS account will not be valid. You will have to sell them back and then purchase the IRS-approved coins. In the end, this will cost the investor money. To see what coins are approved by the IRS press here.
2-A rollover situation could also cost the investor a great deal of money if he/she takes over a couple of months limit to place the funds in the new IRA account. In that case, the IRS will impose taxes on the funds that the investor will have to pay.
3-Overpriced costs. The investor should check charges such as storage fees, shipping costs, administrative fees, and storage conditions. Some companies have a high fee policy for no particular reason whatsoever. They could be annual storage and administration fees and the shipping costs could be huge. These annual fees vary from broker to broker but, they all add up year after year.
The easiest way to avoid traps is to deal with a reputable gold IRA broker. A broker who’s been around for a number of years with tons of experience has earned the respect and trust of its clients.
How to Choose the Right Gold IRA Company
When it comes to choosing the right gold IRA company one must consider the following:
1-Check out the comments regarding the firm, especially the complaints, and see how these complaints were handled. If there is a long list of complaints, that will be a sign to worry about. Also, take a look at the number of years the company has operated, you want ten years of solid record. Finally, the most important is to choose a firm with a commitment to keeping you informed. Keeping you informed now and in the future. If a salesperson gives you short shrift or hits you with a high sales pitch, consider this bad news.
If you are seeking peace of mind, security, and protection from unexpected events then, a gold IRA could be the solution. Keep in mind, that the stock-market downturn has cost trillions of dollars in the last few months.
Consider this, if you had purchased $33,000 of gold in 2001, you could sell that gold today for around $129,551.12 That’s over 300% return on investment! Has your current retirement account performed as well as a Gold IRA would have?