In addition to having an adequate amount of insurance coverage (home, health, auto, life, etc.) and a hearty emergency fund, being financially prepared for retirement is one of the most important things you can do to protect your savings. Some people, especially those who may be averse to stock market volatility, prefer to do so with a Self-Directed Precious Metals IRA.
IRA stands for “individual retirement account.” Very simply put, an IRA is a “savings account with big tax breaks, making it an ideal way to sock away cash for your retirement,” writes CNN Money. A conventional IRA is like a basket for holding onto stocks, bonds, mutual funds, and the like, until you're ready for retirement. A Self-Directed Precious Metals IRA, on the other hand, is like a basket that can hold non-paper based assets, such as physical gold and silver. It can also offer unique benefits over a traditional retirement account. Follow along to learn more about the advantages of owning a Self-Directed Precious Metals IRA and how to get started today.
Diversification is rule number one when it comes to protecting and growing your wealth, and it's the most compelling reason to include precious metals as part of your retirement strategy. Physical gold and silver can offer protection against financial shocks by helping you create a strategically balanced portfolio.
“Diversification is good in a portfolio. You don't want to hold all of one sector or (market) cap or asset,” says Megan Petruska, director of portfolio research and advisory at McMahon Financial Advisors in Pittsburgh. You want holdings “that will almost play against one another,” she continues.
“Gold tends not to move in the same direction as U.S. stock prices, which means it provides a cushion…during times of stock market corrections,” says Henry To, partner at CB Capital in Newport Beach, California. According to To’s calculations, “Over the last 45 years, U.S. stock prices were in downtrends or corrections during 10 of those years, or about 22 percent of the time. During that time, gold outperformed the S&P 500 by 45 percent on an annualized basis.”
By holding physical gold and silver in a Self-Directed Precious Metals IRA to diversify your retirement portfolio away from more traditional assets, like stocks, you can increase your odds of being able to weather volatile markets and turbulent times.
For some people, holding a portion of their savings in physical gold and silver is like taking out an insurance policy on their retirement. Since gold and silver were first discovered, they've held some sort of significance. The same cannot be said for many traditional paper assets, like stocks and mutual funds.
Consider this scenario: if a company goes out of business, its stock could potentially be worth zero and if you held a large portion of this stock, you could be left with nothing. Physical gold and silver, on the other hand, have never been “zero” and can never “go out of business.”
What's more, traditional IRAs made up of stocks or mutual funds can be vulnerable to inflation. “Because gold prices generally move in the opposite direction of paper assets, adding a gold IRA to a retirement portfolio provides an insurance policy against inflation. This balanced approach smooths out risk,” suggests Edmund C. Moy, the 38th Director of the U.S. Mint.
“When people look for a store of value, a currency hedge, a way to protect their wealth, they go to gold,” writes CNBC. Physical gold and silver are the ultimate assets for wealth holders looking for an additional layer of security.
Gain greater peace of mind about tomorrow, today. See how you can achieve your retirement goals and worry less about economic factors outside of your control through U.S. Money Reserve’s Gold Standard IRA Program. To learn more, sign up to receive U.S. Money Reserve's Free Precious Metals IRA Information Kit today!
Self-Directed Precious Metals IRAs are self-directed, which means you're in control of the asset mix. You're not restricted to only holding traditional retirement account assets such as publicly traded stocks and bonds, mutual funds, or Treasury notes.
You're also not locked into a pre-determined asset group chosen by a fund custodian. A precious metals IRA offers you flexibility, the opportunity to take command of what's in your retirement account, and diversify away from traditional assets—all as you see fit. Because the account is self-directed, you have more control over your gains, losses, and degree of risk.
If playing an active role in protecting and growing your retirement portfolio is important to you, there's no substitute for holding physical gold and silver in your IRA—especially if you consider yourself a long-term strategist.
#4: Growth Potential
Conventional IRA accounts are largely dependent upon a select group of stocks, bonds, and mutual funds, which are inextricably tied to the economy, for better or worse. When the economy suffers, so can many IRA accounts.
The economic factors that weaken stocks, bonds, and cash may increase the profit potential of precious metals, as safe haven demand for gold and silver has proven to increase during turbulent economic times.
According to the World Gold Council (WGC), gold's returns have not only been positive over various periods of time, but they've surpassed inflation and short-term bonds. For example, the WGC estimates that since April 2016, the average return on gold exceeded that of 3-month government bond returns by 7.87 percent.
The WGC's calculations support the notion that gold can maintain its purchasing power over long periods of time and is more efficient than cash at storing wealth.
#5: Tax Advantages
Self-Directed Precious Metals IRAs generally receive the same great tax benefits as conventional IRAs. Depending on your tax bracket, contributions to your Self-Directed Precious Metals IRA may be claimed as tax-deductible.
Like all IRA holdings, writes the Journal of Accountancy, gains from gold sold within an IRA are not taxed until cash is distributed to the taxpayer, with distributions being taxed at the taxpayer’s marginal tax rate. While highlighting the opportunities for gold owners to increase their after-tax returns via an IRA, the Journal also compared two hypothetical taxpayers, finding a “significantly higher after-tax rate of return for any form of gold” held in an IRA, rather than in a brokerage account.
Prepare for Tomorrow, Today
Pair your most important portfolio—your retirement portfolio—with one of history's best economic insurance policies—physical gold and silver. You're never too old or too young to start building or protecting your nest egg. Call 1-844-307-1589 to speak with an experienced and professional IRA Account Executive and learn more about U.S. Money Reserve’s Gold Standard IRA Program. Our Account Executives will take the time to understand your retirement status and explain how a Self-Directed Precious Metals IRA could help you achieve your unique financial goals for the future. Call U.S. Money Reserve and worry less about tomorrow, today!