We all take our retirement plans seriously and if you’ve been looking at broadening your investments beyond savings accounts and mutuals, then you may well have been thinking about a precious metals IRA.
It’s not actually as simple as buying some gold bars here and then keeping them in your safe, though; you need to open a specific account with a company that can handle precious metals in the context of an IRA.
Thankfully there’s lots of companies that can do just this for you, so talk to your financial adviser to find the best one for you.
How does your IRA work?
It’s important to understand how each investment vehicle works before you part with any cash. Precious metals IRAs have come up the popularity ranks in the last decade, possibly as a reaction to the 2008 crash. Many people wonder if they’re better off sticking with their 401K, swapping over to a precious metals IRA, or even doing both.
First off, you need to find out if your existing IRA lets you invest in precious metals. If it does, then go ahead; if not, then you may need to rollover your funds into an IRA that will let you use precious metals.
Ideally, this IRA should also let you use other investments in it as well so you’re well-diversified. Basically, what you’re doing with a precious metals IRA is changing assets like stocks, bonds and mutual funds for gold, silver and platinum – but without using any cash to make the transaction.
Say for example your IRA was gold-backed; it’d be handled by the account administrator and a custodian who would store the metal in a vault, in compliance with IRS laws.
It’s vital that you comply with IRS regulations if you want to get the full benefit from your investment once you’ve stopped work. You need to keep your metals in a safe place – one that’s approved by the Federal Reserve – and that’s separate from the custodian’s address.
Why you should think about a PM IRA
Just understanding how a PM IRA works isn’t enough – you need to think about why you might want to start one and if it’s right for you.
If you put some of your money into assets that aren’t dollar-backed then you’re giving yourself some really useful diversification in your retirement funds. Many people use metals as a hedge against inflation and market uncertainty, especially when the global markets are more uncertain than usual, as is the case now.
Gold is the big hedge-metal, but silver is also increasingly valuable as it’s being used in more and more industrial applications, especially in solar power tech, which isn’t showing any signs of flagging!
Diversifying your retirement portfolio means that you have more bases covered. If inflation suddenly goes up, your metals will “step in” to balance things out and if the market becomes very buoyant, well, your dollar-backed assets are doing great and you’ve got lots of gold and silver, which never hurt anyone.