One significant challenge in saving for retirement is the unforeseen inflation rates. Assume you save USD$1,000 for retirement and the annual inflation rate is 2%. In 30 years, you’ll only be able to buy goods and services worth USD$552. And, if the inflation rate is 3%, you’ll be worth only USD$412 after 30 years.
This isn’t news. In the past years, the US has witnessed even higher inflation rates. Take the example of 1981 when inflation hit the unbelievable mark of 13.9%. If such an extremely high inflation rates hit the economy, the value of your money could drastically reduce.
Aside from inflation, things such as political upheavals, crumbling stock markets, tax increase, and black swan events can get you into considerable financial trouble. Since these are things you can’t control on your end, you may want to consider safe haven investments.
By definition, safe haven investments are those investments that are expected to increase or retain their value in times of market turbulence. This limits your risk of losses in future.
Now, gold is one of the most popular safe haven investments. For so many years, gold has been constantly increasing in value. And the upward trend isn’t likely to reverse anytime soon. You may want to visit sites like Learn About Gold for a deeper insight into gold investments.
Starting with the IRA part, you’re looking at an individual retirement account taken care by a gold IRA custodian. This is a retirement savings plan provided by financial institutions. You’ll usually hold paper assets such as stocks and bonds in your traditional IRA account. On the one hand, a gold IRA is where you hold physical gold in your IRA account. Although simply referred to as gold IRA, you can also have other precious metals, such as silver, platinum, and palladium, in your account.
The Internal Revenue Service (IRS) has standards regarding the range of precious metals you can hold in your gold IRA account. You can purchase gold coins or bullions, as long as they’re at least 0.995% in purity.
Here’s a detailed list of the precious metals accepted by IRS:
First and foremost, you need to open a self-directed IRA account. This enables you to invest in valuables that you otherwise wouldn’t be able to invest in with a regular IRA.
Next, identify a reliable precious metal dealer who’ll purchase the gold for you. Remember, you can’t do this on your own, as the law stipulates. The dealer can be a bank, brokerage firm, credit union, trust company, or a savings and loan institution. They must be approved by the IRS to hold gold on your behalf.
The third step is to fund your account. You can deposit cash or transfer funds from other retirement accounts. You can, then, choose the specific precious metal you want to invest in and your custodian will do the transaction for you.
Gold IRAs have several advantages over traditional IRAs, otherwise they wouldn’t be there in the first place.
Like any other investment, gold IRAs have their downside. Here are some of the disadvantages of gold IRAs:
How does it sound so far? Have you weighed the pros and cons and found the winning side? If your mind isn’t made up yet, consider digging deeper into gold investments, and you’ll soon be able to make a concrete decision.Gold IRA: What It Is And How It Works