Bob HatchA Gold IRA also called a “precious metal IRA” functions like your regular IRA (Individual Retirement Account), where you store assets you want to benefit from when you’re retired or in your old age.
But, unlike the classic IRA, the gold IRA allows you to store four major precious metals – gold, platinum, palladium, and silver – Instead of paper assets, as this is a self-directed IRA.
“Gold” IRA gets its name from the popularity of gold among the list of precious metals allowed for storage. It’s typically called that because most people turn to store gold in their individual retirement accounts, making it the officially recognized name in the industry.
How Gold IRA Works
Gold IRA works like your typical IRA but instead of holding stocks and bonds, it saves physical precious metals. The same procedures and tax rules that apply to normal IRAs apply to gold IRAs as well.
Using pre-taxed money, you can get your account up and running. Or you can use post-tax funds to set up your account as a Roth IRA
Advantages of Investing In Gold IRA
Gold IRAs have become a popular investment option since the economic crisis of 2008. Investors now look toward gold as a safer investment option that can protect them during inflation.
The growing demand for gold has led to the establishment of many trustworthy gold IRA investment companies that help investors to purchase and manage their investments. Plus, it has become much easier to invest in gold IRAs.
Disadvantages of Investing In Gold IRA
Firstly, gold IRAs can be expensive to invest in. Then, unlike stocks, gold doesn’t get you interest or dividends. And because gold is not a liquid asset, it’s difficult to make withdrawals on your investment.
Furthermore, it’s easy to fall prey to scammers if you’re new or don’t know a legitimate company to invest with.
How to Invest In Gold IRA
To begin investing in a gold IRA, the first thing you’ll have to do is set up a self-directed IRA account which will allow you to possess a variety of investment products. This account is managed by you alone.
Then you will need to get a broker that will be your assistant in buying and storing your precious metals. Your broker could be a credit union, a brokerage firm, or a bank.
Whatever you do, make sure you choose a broker that has state or federal agency approval.
Fees You Must Pay When Starting Up a Gold IRA
IRA Setup Fee: A one-time fee you pay to set up your IRA account. Your broker determines the amount you pay.
Markup Fee: A one-time fee that you pay upfront when you buy precious metal. The amount depends on your chosen vendor.
Storage Fee: Annual fees you must pay to keep your gold stored and secured.
Custodian Fee: Annual fees you pay for the custodian of your gold IRA.
Bottom Line
Gold IRA comes with its own cons but overall, it’s a great investment option if you’re looking for somewhere else to put your money outside the stock market.
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