To many, gold is the indication of real wealth. Even in this age of digital transactions and automatic deposits, investors love having gold and precious metal holdings in their Self-Directed IRAs.
It makes sense: after all, gold, silver, and other precious metals have been the economic backbone of civilizations as varying from ancient Rome to the United States.
But this is 2015. Does gold really have a place in your IRA, and if so, why? We think precious metals can definitely be a part of your portfolio, especially if you’re interested in building wealth and hedging your investments against inflation. Let’s look at a few of the most popular reasons that savvy investors have for putting aside some money in gold.
Precious Metals Represent True Diversification
It’s something we harp on here at AmericanIRA.com, and for good reason: true diversification of your retirement portfolio doesn’t just refer to having a lot of different stocks. It means “zooming out” entirely. When you “zoom out,” you realize that the stock market—even mutual funds, ETFs, and more—are just one avenue of investing. Having all of your money in the market can represent a risky strategy that depends on market fluctuations for its continued success.
Should you keep a lot of money in the market? Of course. Should you only keep money in the market? We say, no. True diversification happens when you embrace a number of different mediums for storing and investing wealth.
When your money is in gold via an IRA, you have a hedge against the other types of investments, which helps balance your portfolio for long-term strength. Think about it this way: adding gold to your investments means you’re casting a wider net, as a wise fisher is always wont to do.
Avoiding Currency Fluctuations
We’re a big believer in the U.S. dollar as a currency. After all, it’s the currency around the world by which other currencies—and commodity prices—are often measured. But we don’t think it’s wise to take money out of your bank account, bury it in the backyard, and call it “investment,” either. Avoiding currency fluctuations is one of the most important ways to ensure the continued growth of your wealth. And since gold’s price is measured in the U.S. dollar, buying gold gives you a great option for hedging against inflation.
Gold is Finite
One of the reasons many investors like gold is because investors who believe in long-term success know that finite commodities like real estate and precious metals tend to grow in value over the long-run. Let’s face it: the earth has a limited supply of gold, which means that the more you can get your hands on at a low price, the more likely it is that you’ll build wealth. Like real estate, gold tends to only increase in value in the long term. Yes, other investments like the stock market and real estate share the same property…but remember, diversification is the name of the game here.
Finally, we return to that idea of “tangible wealth” – the idea that gold is the most tangible form of wealth around.
Having some measure of tangible wealth separated from the electronic world we now live in makes many investors feel more secure as a sort of “last bastion” of wealth protection. And feeling more secure is the name of the retirement game.
Interested in finding out how you can use a Self-Directed IRA to invest in gold? Call us at 866-7500-IRA(472) to find out how it’s done and how you get started investing in a truly diversified portfolio today.