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 may be 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 prepare for retirement with a self-directed precious metals IRA.
IRA stands for “individual retirement account.” Simply put, an IRA is a “savings account with big tax breaks, making it an ideal way to sock away cash for your retirement,” according to CNN Money. A conventional IRA is like a basket for holding onto assets like stocks, bonds, and mutual funds until you’re ready for retirement. A self-directed precious metals IRA, on the other hand, is a larger basket that can also hold non-paper-based assets such as physical precious metals. It can also offer unique benefits over traditional retirement accounts. Read below to learn more about the advantages of owning a self-directed precious metals IRA and about how to start adding one to your retirement portfolio today.
Benefits of a Gold IRA (or Other Self-Directed Precious Metals IRA)
Diversification is rule number one when it comes to protecting and growing your wealth. It’s also the most compelling reason to include precious metals in your retirement strategy. Physical gold and silver can help offer protection against financial shocks by contributing to a strategically balanced portfolio.
“With any [portfolio] strategy, it’s important that you not only think carefully about your asset allocation and make sure to diversify your holdings when you establish your portfolio, but you also must stay actively attuned to the results of your choices,” notes FINRA, a nonprofit organization that oversees broker-dealers.
“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 Partners in Newport Beach, California. And according to former Federal Reserve Chairman Ben Bernanke, “The reason people hold gold is as a protection against what we call tail risk—really, really bad outcomes. And to the extent that [the Great Recession has] made people more worried about the potential of a major crisis, then they have gold as a protection.”
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.
The first step in diversification is understanding how diversified your portfolio currently is. To get started, take our free diversification quiz.
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 various types 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. 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, 38th Director of the U.S. Mint and U.S. Money Reserve’s Senior IRA Strategist.
“When people look for a store of [wealth], a currency hedge, a way to protect their wealth, they go to gold,” CNBC has written. Physical gold and silver are the ultimate assets for portfolio holders looking for an additional layer of security.
Gain greater peace of mind about tomorrow—today. See how you can get closer to achieving your retirement goals and worry less about economic factors outside of your control with a precious metals IRA through U.S. Money Reserve. To learn more, sign up to receive your free Gold IRA Information Kit today!
#3: Hedge Against Inflation
During times of inflation, paper and paper-based assets can slip in price or relative worth. Cash, for example, can see a drop in its overall purchasing power, and stocks may drop in price. Inflation can also weaken the health of IRAs that only hold paper or paper-based assets. However, gold has historically performed well during periods of inflation, which may provide a unique opportunity for diversification. Diversification, many experts agree, is an essential part of protecting a retirement portfolio against inflation and other shifts in the marketplace.
Inflation is a normal part of the economic cycle and a factor that every retirement portfolio will have to weather from time to time. But because gold and other precious metals have historically performed well during periods of inflation and recession, having a precious metals IRA may be a good way to help enhance your diversification and support long-term portfolio growth.
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 predetermined asset group chosen by your account’s custodian. While precious metals IRAs do require custodians, as self-directed accounts, they offer you more flexibility to diversify away from traditional assets, as well as the opportunity to take full command of what’s in your retirement account. You have more control over your level of risk exposure and thus more control over your financial future. Buying precious metals is best done through a reputable precious metals dealer or distributor. Call U.S. Money Reserve at 1-844-307-1589 to speak with a dedicated Account Executive about purchasing precious metals for your portfolio or opening a precious metals IRA.
If playing an active role in protecting and growing your retirement portfolio is important to you, you’ll find that there’s no substitute for holding physical gold and silver in your IRA—especially if you consider precious metals to be an important part of a well-diversified, long-term growth strategy.
#5: 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: Safe-haven demand for gold and silver has historically increased during turbulent economic times.
#6: Tax Advantages
Precious metals IRAs generally receive the same tax benefits as conventional IRAs. Depending on your tax bracket, contributions to your precious metals IRA may be claimed as tax-deductible.
Like with all Traditional IRA holdings, writes the Journal of Accountancy, distributions are taxed at the taxpayer’s marginal tax rate at the time of distribution. 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
A precious metals IRA allows you to pair one of your most important portfolios—your retirement portfolio—with one of history’s most impressive 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 opening a precious metals IRA with the help of U.S. Money Reserve. Our Account Executives will take the time to understand your unique financial situation and goals and explain how a precious metals IRA could help you achieve a more comfortable retirement. Call U.S. Money Reserve and worry less about tomorrow, today!
Click here to request your free Gold IRA Information Kit.