It’s one of the oldest investments possible: precious metals. For millennia, people have used gold, silver, and other precious metals to serve as a store of value. That’s why so many people turn to these same assets for their retirement—they can have a reasonable degree of confidence that they will hold on to their value over time. Unfortunately, people today are quick to share bad advice and misguided assumptions about Self-Directed Gold IRAs that may turn you away from this strategy before you have thought it through or even done your homework. Let’s clear the air today by looking at some of the worst assumptions people make.
Assumption #1: Self-Directed Gold IRAs Don’t Provide Solid Returns
Off the bat we have to tell you that we are not a financial advisor, and we cannot tell you what kinds of returns to expect with any asset. But what we can tell you is that no one can predict the future. In fact, it’s this kind of prediction without any diversification that can be off-putting to the type of person who might otherwise invest in Self-Directed Gold IRAs. If you are going to invest in gold, or not invest, make sure that it’s your decision, and not someone else’s. Do your homework so you feel empowered to make the investments you are comfortable with. There’s nothing wrong with making this claim, but it’s the assumption that you know the future that we have to push back against.
Assumption #2: Gold Is Too Inconvenient for a Retirement Account
Some people look at the rules of Self-Directed Gold IRA investing and learn that they cannot hold their gold in their own home (at least not if they want the tax benefits of a retirement account) and this can be discouraging if you were picturing a different sort of arrangement. But the truth is, it can be very convenient to store gold in a separate location. And when you do so, you are not only following good habits, but you are meeting the requirements of keeping gold within a Self-Directed IRA.
How does it work? You will store gold in an insured approved depository, then they will charge your IRA an annual fee for this storage. You will also be the one choosing the depository. That puts a high degree of control in your own hands, even if the gold, silver, or any other precious isn’t always physically with you.
Assumption #3: Gold Will Not Be a Hedge Against Inflation
Some people point to the performance of precious metals in recent years, compare it to inflation, and say that gold has not acted in its proper role as a hedge. And while this is important homework for any gold investor to do, keep in mind that asset diversification is more complicated than that. You may want gold as an inflation hedge, but if you expect gold to spike every time inflation goes up, you might be surprised by how the asset behaves. This gets back to a central point: no one can predict the future. One of the reasons investors flock to precious metal IRAs is that they know they cannot predict the future. Having physical assets as part of a retirement portfolio gives them the confidence they need to rely on their retirement portfolio retaining value in the long run. And that confidence alone can be enough to keep an investor saving, even when the stock market is not performing how many people hope it would.