When it comes to investing for retirement, there are many different options available— stocks and mutual funds, to name a few. However, market uncertainty has encouraged many investors to broaden their horizons and look at alternative investments in recent years.
Gold IRAs are a fantastic alternative to stocks, bonds, and mutual funds. Here are some compelling benefits by adding a gold IRA to your investment portfolio.
Contribute to a Diversified Portfolio
Diversification is essential when planning for retirement. The adage “don’t put all your eggs in one basket” is the quintessential investment advice from leading experts worldwide. In essence, diversification acts as an insurance policy to ensure you still have options if an investment tanks.
Gold is considered an alternative investment, often classified with other hard assets like high-value artwork, antiques, and real estate. As the best gold IRA companies will tell you, alternative assets tend to operate individually, apart from paper assets. Investing in gold is a strategic way to diversify and take a different approach to building a nest egg.
Recession-Proof Investment Option
Gold has been considered valuable for hundreds of years, which isn’t likely to change anytime soon. In fact, the value of gold has climbed to $1,928.40 per ounce in September 2020 from $1,593.50 in January 2020. Perspectively, it was valued at $1216.49 in September 2015.
While there have been dips in gold value over the years, it’s one of the few commodities that kept climbing through various recessions. In addition to climbing during the global pandemic, when other markets were in free fall, it also endured throughout the housing market crash of 2008, experiencing only a slight dip before coming back stronger in January 2009.
Gold has proven to be one of the most enduring investment options. While companies may go under and render stocks worthless, and the housing market might collapse, gold is eternal.
Same Tax Benefits as a Traditional IRA
There are a few notable differences when using a gold IRA. Generally speaking, the fees and costs associated with handling gold investments tend to be higher. This approach also includes dealing with a physical product, which necessitates storage facilities and handling fees.
However, the core benefits of using a gold IRA are the same as investing in mutual funds or stocks. When you use a gold IRA, you are still eligible for a tax deferment, only paying when you withdrawal from your investments. Additionally, you could qualify for the Retirement Savings Contributions Credit, which will enhance the value of your investment.
Finally, if your gold IRA goes untouched, it’s eligible for inheritance tax relief when passed onto your family. This feature ensures that your assets stay within the family and not add to the burden of your passing.
Control Over Portfolio
The only option for a gold IRA is to open a Self-Directed IRA (SDIRA) with a custodian to oversee your account. However, the custodian essentially acts as a connection point for moving assets around— they do not provide financial advice or make decisions on your behalf. As such, you have full control over your portfolio.
It’s important to note that there are rules to follow when opening your account. You can’t add gold that you already own to your SDIRA; your custodian must coordinate the transaction. Furthermore, the assets of your gold IRA must be kept in an IRA-approved location and can’t be kept on your person.
As Good as Gold
Investing in a gold IRA is a wise decision when trying to diversify your retirement portfolio. This tangible asset stands the test of time, even during periods of market instability.