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Precious Metals IRA
IRA accounts can vary, with many different option, however there is no IRA account more secure than one that holds physical goods, such as gold or silver. The simple truth is that stocks and bonds can decline and crash, and even the American Dollar looses its purchasing power. Precious goods such as metal however hold there value as a universal currency. You can also withdraw your own bullion’s and do with them as you will under IRA distribution rules.
How To Start Your Precious Metals IRA
1. Firstly you must contact a custodian. From this step on you will likely be assigned a single broker to deal with who will help you every step of the way. It is true they get paid high commissions from your IRA, however they also largely rely on your repeat business and your constant investment over many years. For this reason they are absolutely dedicated to you and it is in their interest to see that your IRA performs well.
2. Usually you must first fund your account with the funds you wish to invest. There are several options here, firstly you could invest with cash straight away or the more common way for IRA accounts is to rollover your 401K to an IRA, and thirdly you can simply do a Roth IRA conversion. These methods are more common than simple cash simply because you will need a minimum of $10k to open your precious metal IRA. You will also need to decide if you want a self directed IRA or a traditional IRA.
3. Your IRA is now setup and is ready for you to lock in your price for the gold, silver, platinum or palladium. Depending on whether you have a self-directed IRA or not will determine if you select your own bullion’s. A price confirmation will be sent to you and confirmation on transaction will be needed. Once this is done it is wise to have paid storage and insurance on these assets, after all it is pure gold.
A Roth IRA works by paying in funds or assets that have already been taxed, this way any funds that you withdraw in your retirement are your to keep in there entirety and the government cannot touch it as you have already paid tax on it.
A Traditional IRA is the opposite to a Roth IRA, instead of paying tax before you invest you put in pre-tax funds or assets, however when you withdraw your retirement fund the government will tax you on whatever you have.
A Self Directed IRA can be either a Roth or Traditional IRA, the only difference is you have complete control over the assets that are invested in, be it bullion’s, stocks, bonds, real estate etc…
So How Does a Precious Metals IRA Differ?
It dosn’t, a precious metals IRA such as a Gold IRA can be any of the above, the only difference is your only asset is gold, silver, platinum or palladium. Some IRA’s may only allow you to have on kind of precious metal or a mixture of whatever you choose.Technically all precious metal IRA’s are self-directed and you have ultimate power over what goes into them, however many investors leave it to the brokers or IRA custodian to decide on what to purchase.
All IRA’s are either ROTH or Traditional, then it is your choice if you want to control your own assets with self-directed or not. Then Precious Metal IRA’s are simply a type of asset you can invest in. A precious metal IRA can be Roth or traditioanl.
More About Precious Metal IRA’s
Typically there is 2 storage options with your IRA.
- The first option is to have the bullion’s stored is self storage, you can have bullion’s sent directly to you. However you must consider the fact that you will have tens of thousands of dollars worth of goods, if not more. Obviously for insurance reasons you will have to store them securely, for most people a specialised bank is the best option.
- Your second option is to have your bullion’s stored in a national depository, this is probably the most secure option, however it does come with a fee attached, most IRA custodians will recommend this and organise this all to be for you. Most precious metal IRA holders choose this option and in reality never see their bullion’s, simply because there is no need to.
Precious Metal As A Hedge
As precious metals move independently from the stock markets many large investors including corporations use metal to hedge against their stocks. As bullion’s are used as the basic form of universal currency many investors and companies will hold their assets in the forms of bullion’s. Therefore as stock prices fall such things as gold will hold there value or even increase. Having investments on both sides of the scale (bullion’s and stocks) is a safe way to ensure there is always assets with value that can be called upon in times of need.
Hedging can be done with many sorts of assets, such as art or real estate, and whilst property or art can jump hugely in value they can also drop in value just as dramatically. Gold has proven to be the most stable hedging option .