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An individual Retirement Account (IRA) is a particular type of savings account that helps people prepare for retirement in the United States. There are tax advantages to saving in an IRA account. In the United Kingdom, the equivalent savings account is called a Personal Pension. A 401K is a company backed retirement plan (Workplace Pension in the UK), whereas IRAs are started by an individual.
IRAs can be subdivided into Roth IRAs and Traditional IRAs. With Roth IRAs, there is no tax deduction for contributions but when your investment earnings are distributed in retirement this is done tax and penalty free. Traditional IRAs by contrast, do offer deductions for contributions but when your funds are distributed at retirement taxes on investment earnings have to be paid.
IRA funds can be invested in individual stocks, bonds and cash. There are also many mutual funds that you could choose from. Either on your own or after receiving advice decide on an asset allocation that you are happy with for your IRA.
What is a Gold IRA?
Gold IRAs were created by the Taxpayer Relief Act of 1997. A Gold IRA account is a way to diversify your retirement investments further. A Gold IRA gives the investor the chance to own physical Gold, Silver, Platinum or Palladium.
To invest in a Gold IRA, you will need to set up a self-directed individual retirement account (SDIRA), this is an IRA in which the investor is in charge of making all the investment decisions.
What are the Benefits of Gold IRAs?
Investors have created Gold IRAs because they perceive them to be a counterbalance to what is happening with their more traditional investments. If paper based assets such as stocks are trending downwards, Gold tends to move in the opposite direction. Adding a Gold IRA will diversify your retirement investments. Since the financial Crisis of 2008 Gold IRAs have increased in popularity because of this investors’ desire of investors to spread risk with their retirement investments.
You can potentially benefit from increases in the price of Gold, of course this cannot be guaranteed. Between 2000 and 2012 the price of Gold increased for 12 consecutive years. While stocks can literally become worthless, the price of Gold will never be worth zero.
Remember, it is possible and advisable for an individual to have more than one IRA. You could hold one mutual fund IRA and a Gold IRA, for example.
Setting up a Gold IRA is quite a complicated process. First of all, you need to find an approved custodian (Broker) for the IRA and an approved Depository, where the Gold will be stored. Then you buy the Gold and have it transferred to the Depository.
Historically, some Gold IRA companies have not are not completely transparent about their fees and investors have experienced surprises after they have invested. Before you create a Gold IRA or rollover an existing IRA into a Gold IRA ensure that your custodian has confirmed all costs and fees.
Do you have a Gold IRA already? How do you think your investment is performing? Let me know in the comments section below.
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My aim with each blog post is to help you move to a better financial future. I believe that there is not enough financial education in the national curriculum and I intend to share anything helpful that I have learned along the way. I am by no means a financial expert. None of the information on this website constitutes financial advice and is provided as general information only. This is my personal finance blog; my marketing blog is over here and I have been blogging there since 2010. I hope you have found this information useful. Thank you for reading.
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