Recent headlines have shown the necessity to protect against the downside when it comes to one’s financial planning. With inflation high, the stock markets turbulent, and the possibility of a recession looming, many people believe that there should be diversification within a portfolio to help stabilize it. But how do investors actually achieve that level of diversification? What are the actual tools for doing so, especially with retirement money? For many, it comes in the form of a Self-Directed Gold IRA, or a retirement account in which the investor holds precious metals.
But what is this style of investing, and what are some of the dos and don’ts you need to be aware of before you begin? Here’s what you need to know.
Gold IRAs: Do Consult with a Self-Directed IRA Administration Firm
When you self-direct, you need to make sure that you do so properly. For example, a Gold IRA has specific rules—as does any retirement account—for the use of precious metals. You can’t keep a gold necklace within an account, for example, because it’s hard to valuate this in a way that you need to keep a retirement account in good standing.
However, in consulting with a Self-Directed IRA administration firm, you may likely find that they can only service valid retirement orders. You can also work with them to ensure that your gold and other precious metals are maintained in a insured approved depository, which is another requirement for keeping a Gold IRA.
Gold IRAs: Don’t Store Your Gold Personally
Once you know that you can keep precious metals within a retirement account, you may find it tempting to want to keep those precious metals nearby. But you have to be careful here. This is still a retirement account, and one key to holding a retirement account is that you’ll have to make sure that you store your gold in an insured, approved depository. These depositories will keep your precious metals separate from your personal effects, which is the point of a retirement account—by keeping the two separate, you can utilize the tax advantages of investing in a retirement account.
Gold IRAs: Do Understand the Role of Gold
Many people like to think of gold as a speculative investment. But let’s keep in mind that gold and other precious metals have been in financial use for thousands of years. Many people add gold to their portfolio knowing that it is a long-term store of value with this rich history of maintaining that value. As such, it is a unique asset class—as are all precious metals. We can’t make any predictions as to where it will head, or whether it will go up or down in the next few years. But because it is an asset class unlike any other, adding it to a portfolio can help diversify that portfolio.
Gold IRAs: Don’t Start Until You Know What You Want
When you read the above, it can be tempting to dive head-first into your first Gold IRA. We encourage you to read up on Gold IRAs, as you’re doing now, and to seek out information that will help you understand what it takes to set one up. Fortunately, there’s always the possibility of working with a Self-Directed IRA administration firm, which will help you better understand the process from step one. Once you do that, you’ll have a much clearer picture of what it takes to start investing in precious metals within a retirement account that you choose.