Gold is not your typical investment. As a matter of fact, some financial gurus will tell you it is not really an investment at all. Because it is a tangible asset, they say, you could look at gold more as an insurance policy. You hold it in case there is a financial crisis, and your other investments are in turmoil. No matter how you choose to look at gold—investment or insurance—it should be part of your portfolio in a Self-Directed Gold IRA. Hard assets, which could also include other precious metals like silver and platinum, can provide a hedge against inflation. They are negatively correlated with traditional investments like stocks and bonds. In other words, when stocks and bonds take a downturn, tangible assets such as gold tend to appreciate.
While no one can say what percentage of your portfolio should be in a Self-Directed Gold IRA without first looking at your situation, typically you will see hard assets taking up from 5% to 20% of an investor’s retirement portfolio. But regardless of the amount you hold, the arguments for having some of your retirement funds in a Self-Directed Gold IRA are compelling.
Here are a few:
Diversification is always first on the list of suggestions for protecting and growing your retirement funds, which makes it essential that a Self-Directed Gold IRA be part of your strategy. Hard assets offer true diversification by working in a different direction than your financial assets and helping you create a tactically-balanced portfolio.
It is easy for investors to feel comforted because they have their stocks spread over various sectors or asset classes or their bonds split between Treasuries, corporates, and high-yield offerings. In truth, these methods provide only limited diversification. The lack of correlation that comes from tangible assets adds a much more diverse element to your account.
Potential for Growth
The same economic factors that cause stocks and bonds to diminish can help gold to increase in value. For example, over the last 15 years, gold has increased by 315%. Over that same period, the Dow Jones Industrial Average went up 58%, and investment-grade bonds returned 127%.
Taking a longer look, however, gold has gone up 335% over the past 30 years, while the Dow has gained 1255% and bonds have returned 672%. All of these figures show the growth potential for gold, but, even more importantly, underscore the need for diversification within a long-term portfolio.
A Self-Directed Gold IRA provides the same tax benefits as a conventional IRA. Contributions to your Self-Directed Gold IRA may be claimed as tax-deductible, depending on your tax bracket, of course.
And any gains made from selling gold within the IRA are not taxed until you take a distribution. In many cases, investors will see higher after-tax returns with a Self-Directed Gold IRA than with a conventional non-retirement brokerage account.
Financial assets like stocks, bonds, mutual funds and cash will make up the lion’s share of your retirement portfolio. So, holding a portion of your retirement account in physical gold can be viewed as taking out an insurance policy on your retirement.
That is because gold, unlike common stock in a company, can never be worthless. Gold does not go out of business, and that helps to offset some of the risks in your non-tangible assets. And, while stocks and bonds are vulnerable to inflation, gold acts as a hedge against it. Yes, you could call it an insurance policy–insurance against the inflation that could eat away at the future buying power of your retirement account.
Under your Control
“Self-Directed” says it all. You are in control of your asset mix rather than having it pre-determined by a fund manager. You have the flexibility to add a Self-Directed Gold IRA to diversify as you see fit and the opportunity to take control of your retirement savings with a wider range of investment options.
At American IRA, we have the experienced professionals to guide you through the simplified application process and get you on your way to earning tax-deferred and/or tax-free income within your retirement account. To download your free Self-Directed Gold IRA guide, click here.
For more information on opening a Self-Directed Gold IRA account, call us today at 866-7500-