An Individual Retirement Account (IRA) refers to a long-term savings plan that allows individuals to save money in a locked account. IRA plans provide an assortment of benefits that include significant tax breaks and financial independence upon retirement. There are many types of IRAs, all of which have their unique advantages and drawbacks. These include Roth IRA, Spousal IRA and Traditional IRA.

Gold IRA is an emerging retirement plan that’s approved by the Internal Revenue Service (IRS). This particular IRA option allows clients to invest their money in physical gold, platinum, silver and similar precious metals that are authorized by the IRS.

How does a Gold IRA work?

Investing in gold is one of the best ways to grow your wealth and diversify your investment portfolio. After all, gold is one of the few assets that appreciate in value even when other assets plummet. The price of gold will reliably increase with time.

Opening a gold IRA guarantees you a handsome return on investment, especially because gold offers a strong hedge against currency devaluation and inflation. The price of gold isn’t affected by economic crunches that have historically occurred time and again – this makes it the best store of wealth that money can buy.

Who provides gold IRAs?

Unlike conventional IRAs that are offered by typical brokerage companies, gold IRAs are only provided by some special custodians. Gold is a relatively complex asset and as such, the IRS imposes strict conditions that include proper record keeping and regular tax reporting for gold IRAs.

Choosing the right custodian to manage your gold IRA is paramount. They’ll not only provide regular tax reports to the IRS but also organize your paperwork to ensure that you’re operating within all legal confines. However, the IRS doesn’t allow people to actually own or store gold and other precious metals in their homes. You can only store these assets in a national depository or an IRS-sanctioned external trustee.

How to invest in gold using a Gold IRA

Opening a gold IRA account is easy: simply get in touch with a distinguished gold IRA company and open an account with them. There are several custodians who offer exemplary gold IRA services and resources in the market. However, it’s important to conduct some research and compare different firms before choosing one that suits your requirements.

Once you’ve opened an active gold IRA account, go ahead and purchase some physical gold by channelling some money into your new account. You’ll be eligible to invest in gold bars, gold coins, silver bars and more. If you already have an existing IRA, it’s possible to roll over the funds therein into a gold IRA.

What fees are charged on gold IRAs?

Before investing in a gold IRA, it’s important to familiarize yourself with the extra fees you’ll be charged by your choice custodian. These costs wouldn’t normally apply to conventional IRAs. These include:
  • Account activation fees: you might be charged for the initial account setup. This fee could amount to $100 or more depending on your custodian. However, several gold IRA companies don’t charge this particular fee for clients who make huge deposits.
  • Storage and Insurance fees: these charges depend on the total amount of gold held in your account. They could reach up to $300 annually.
  • Maintenance fees: since you’ve essentially hired a custodian to manage your gold IRA account, they might charge a flat annual maintenance rate. This amount takes care of all the administrative costs.
  • Wire transfer fees: your custodian might decide to charge a certain rate for the money wired into or out of your gold IRA account. These fees could reach $25 per wire transfer.

Other applicable fees include seller fees and cash-out fees.

Benefits of opening a gold IRA

1. Diversifying your retirement portfolio

Investing in gold guarantees positive returns on investment (ROI) regardless of the prevailing economic climate. In fact, the gold market usually trends in the opposite direction to paper assets. Adding gold to your retirement plan offers a reliable windbreak from inflation.

2. Enhanced flexibility

Apart from buying gold bars and coins, you can also choose to invest in silver, platinum and other precious metals that are ratified by the IRS. This flexibility provides clients with more freedom of choice.

3. Building sustainable wealth

Opening a gold IRA account boosts your ability to create wealth consistently. You’ll certainly reap the fruits of this wise investment option once you enter into retirement.

Final Thoughts

You can successfully invest in gold bullion using a gold IRA account. Although it’s not the only method of investing in this rare commodity, it’s one of the best options for people looking for a long-term investment plan.