Should You Invest Your IRA in Gold?
Interest in buying gold has increased tremendously in the most recent years with the corresponding increase in the price of metal and many people still wonder whether they can buy bullion using their IRA. Could there be any problem buying gold using one’s IRA? Many companies dealing with gold will recommend that you buy it in IRA. But would it certainly be the best thing to do? It is important to understand the advantages and the downside of buying bullion in IRA before making the plunge. Below are some of the important things to keep in mind while considering gold IRA investment.
If you are not a skilled trader, this kind of gold investment can be a real pain in the neck as you’ll have to locate a reliable trustee who can set up your account, acquire the gold, and secure it for you. Your IRA trustee may not offer the option of keeping physical gold or silver so you’ll need one to do this for you. The trustee will be required to prepare and send reports as well. Companies that can offer this service can also charge very high fees than what a normal IRA trustee would charge for keeping stocks in plain manila or for handling mutual funds, and bonds. In addition to the commissions you may have to pay to the trustee handling your account, there are a number of things you also need to think about when considering gold IRA investment such as the kind of bullion you can buy in IRA.
The gold coins or bullion must be .995 fine. It is important to note that there is a good number of coins that do not meet the requirements for gold IRA investment. An example would be the South African Krugerands, which are considered as collectibles and cannot be held in IRA. One of the best ways to go about buying gold in IRA would be an exchange traded funds (EFT) which allows you to track gold prices. Just as they can buy and sell any stock, brokerage firms can also buy and sell EFTs. EFTS such as PSLV, GLD, PHYS, and SLV are very convenient to buy and the annual fees to keep them are less compared to buying bullion. But if you are concerned about security, it would be more advisable for you to buy bullion and have it stored in vaults that are secure, insured, and privately held. If you want to keep your gold in your private safety box, then you’ll need to pay taxes before you can take it away.
One of the things that should be noted is that precious metals bought with IRA are not stored in a bank. They are shipped to a private, secured, bonded facility where they are stored. Hiring the right custodian to keep the gold is important as you will expect him to send periodic statements about the transactions and an estimation of the fair market value of your silver and gold holdings. The cost of hiring a custodian will depend on his or her fees, the storage facility, and the size of the IRA. Generally, the cost would range from $200 – $400 per year. Since gold market has increased to about 15% to 20 % in the most recent years, it is understandable that the cost of hiring a custodian can be high, especially when other aspects such as accounting, fees, expenses, IRS regulations, and profit are considered.
The questions of whether you should buy gold in IRA boils down to whether you should own gold or not. There are those who see investment in gold as a solid hedge against inflation. With the falling value of the dollar, gold can come in as the best option to protect one’s investments. It has been considered by many and for a long time as the currency of all ages. It could be really astonishing to see how much investment people put in digging up gold from the ground and how much they spend in storing it in underground storehouses and vaults. It only justifies how valuable gold is, and how it can withstand the changing, even the inflating economy of any time in history. Using your IRA to buy gold can be one of the best ways to protect your retirement investments and take advantage of some of the tax benefits that come with it. This may not be the best form of investment for everyone, but you can invest a percentage of your IRA in gold.