Many people have an IRA that they allow others to manage for them. They purchase a recommended set of diversified stocks, bonds, and other financial products and then let the wealth build a little bit every day. This has been a successful method of investing for many households over the years, but since 2008 times have been a little different. There is a lot more volatility and uncertainty in the markets. This has made the potential for big profits to be achieved, but big losses have also been realized.
How can the risks be tempered so that an IRA portfolio can continue to grow? A gold IRA is one of the best options to consider today. Gold can be included in a wide variety of ways, from tangible assets to shares to ETFs. You’ve got plenty of options, but it is also important to remember that you shouldn’t have an IRA that is 100% gold.
What Is the Best Way To Diversify With A Gold Based IRA?
Everyone has their own preferences and experiences when it comes to trading and investing, but a gold backed IRA is best managed on your own and not from a representative of a financial institution. Consider getting an online IRA account from a preferred financial institution and then make your first deposit or do a trustee-to-trustee transfer. From there, you can select the gold product that you prefer for your IRA.
- Gold ETFs. These are a lot like purchasing a share of an existing gold product. In basic terms, it’s a lot like having a mutual fund that is based on the value of gold. These ETFs are reflective of the spot price of this metal on a daily basis, so you can see some profit or loss in your IRA every day. The benefit is that these ETFs are relatively stable, will increase in times of uncertainty, and the pricing structure is consistent so you’ll have a solid investment foundation. Gold will always be worth something.
- Actual gold products. You can actually purchase gold bullion for your IRA and have it stored by a third-party custodian. This has some advantages and disadvantages. The advantage is that you actually control the gold through your IRA instead of a paper value on gold that someone else owns. The disadvantage is that you have to pay security and storage fees out of your IRA annually to the custodian of your gold.
- Rare gold products. One of the unique investments that you can make with your gold IRA is into rare gold coins. There are certain standards of quality that must be met and you will generally need to purchase coins that have face-value currency worth in the country of origin. US gold coins are usually the best option for this as they have guarantees from the government. You’ll generally pay a premium over the spot price and be required to pay a third-party custodian.
If you are looking to temper risk, having a precious metals IRA that is backed with gold may be a good idea. Silver, platinum, and palladium can all be included as an IRA investment so that you can be slightly diversified while insuring yourself against a bear market. If you’re looking for a more aggressive approach that includes gold, however, you have some additional options.
An 85/15 Approach Is Still Conservative, But Can Build Wealth
A good approach to those who are looking for some diversity, but are willing to take on some risk, is to put 15% of your investments into aggressive stocks that are highly volatile while putting 85% into stable products like gold. What are some aggressive investments that you could put your 15% toward within the confines of your IRA?
- Oil futures or ETFs
- Real estate
- Private loans
There are certain rules that apply to some of these investments. If you purchase real estate through your IRA, then you may need to pay a custodian to care for the land or property so that it maintains its value. If you purchase rental property, then all costs associated with the property must be taken from the IRA funds. Private loans may or may not be authorized by your financial institution. Oil futures or other similar highly volatile stocks can bring huge profits, but futures require constant monitoring to maximize their value. You will incur more fees with trades of futures and ETFs, but your returns can easily exceed 15% on an average year.
What about investing into high dividend stocks? This can be a good option for when you’re first starting out, but may not be appropriate for IRAs that already have high value amounts. There is a $1,000 cap on the amount of dividend income that can be obtained in a tax-advantaged IRA without incurring a penalty. For a stable stock like Apple that pays less than 50 cents per share in dividends, this may not be very worrisome and can be a good way to compound value at first. Once you start approaching the income limit, however, it will be time to make a change.
Are You Ready To Invest In Gold Today?
Why is a gold backed IRA one of the best options for you today? It’s stable. It’s valuable. It’s also very easy to turn into liquid cash when necessary, especially if you are buying and selling ETFs. Although large bullion purchases could be problematic when it is time for a distribution, having the tangible materials in your possession, albeit through a third party, can provide an added level of security as well.
If you are investing into gold, it is also important to keep a small percentage of cash on-hand in case you need it. This will allow you to cover a margin if need be, give you access to additional investments, or cover a trading fee.
A gold backed IRA could be the key to your comfortable retirement. Use this secure precious metal today to limit your investment risks and your portfolio may build real wealth like never before.