The Benefits of Investing in a Gold IRA
A couple of decades ago, the 1997 Taxpayer Relief Act allowed American citizens to have a gold IRA. This continues today and allows you to invest in gold, as well as other precious metals like palladium, platinum, and silver.
But what are the benefits of having a gold IRA? Is it really a good investment option to use to plan for your retirement? Isn’t a 401(k) plan enough to build a nest egg for your future?
Well, in this guide, we’ll make it clear what some of the key benefits are when you invest in a gold IRA. So let’s delve into this!
Table of Contents
What Is a Gold IRA?
Simply put, a gold individual retirement account (IRA) is an IRA that lets you invest in precious metals, the most notable being gold. A standard IRA doesn’t let you invest in precious metals.
With a gold IRA, investors can look to diversify their portfolios. Plus, there may be tax benefits if you choose to sell your gold. Now, let’s check out some of the key benefits when you invest in gold with a gold IRA:
One of the greatest issues people have when planning to grow their investments long-term is unexpected losses in their portfolio. And, you tend to see such losses occur in 401(k) or general IRA accounts. This is because the markets can be volatile and unpredictable.
To prevent you from suffering from unpredictable and possibly heavy future losses, you need to diversify. When you choose to have a gold IRA, you put that diversification in place.
The idea is you want to achieve a decent level of stability with your portfolio. And since gold isn’t strongly correlated to investments like bonds or stocks, it works as a good stabilizer investment. This may also be true if you choose to invest in other precious metals.
What you will often see is that when the stock market or bonds go down, precious metals tend to hold their value. So ultimately, precious metals investing acts as a solid financial buffer when things start to look worrying everywhere else.
Stocks and bonds depend on the currency system, as we class them as dollar-denominated assets. Thus, they also depend on the Federal Reserve and the government in general.
Since the government tries to keep the interest rate low but also prints more money, they create inflation. This is not good for anyone’s real wealth, hence why many of us invest, rather than just keeping a standard savings account.
The great thing with gold and other precious metals is that their price is not dependant on Federal Reserve policies and the currency system. So it makes sense to invest in them through a gold IRA company to stem the effects of inflation on your wealth in other forms.
Protection From Financial Crashes and Recessions
Precious metals have a strong history of maintaining portfolios when there are economic downturns. Gold in particular is known for its resilience to economic woes.
For example, gold kept things going through the Great Depression, and the 1973 oil embargo. And in recent pandemic times, gold has held strong. Digital and paper assets on the other hand are more volatile and follow overall market trends.
Plus, when there have been hard economic times, in many instances gold has helped individual investors even grow their portfolios. After all, the ancients once thought of this precious metal to symbolize immortal power!
Precious Metals Aren’t Digital Assets
When you buy gold and other precious metals, you are buying a real object which can be stored away securely in vaults. Or you can even keep it at home with your own security setup.
However, when you invest in stock portfolios, bonds, and other digital assets, you leave yourself open to cyberattacks. And cyberattacks are becoming more and more of a concern as we move on through this digital age.
Imagine if some of your digital assets like a stock portfolio became frozen! Therefore, in line with our primary argument to invest in gold, diversifying your investments with a gold IRA is a good idea.
Alleviate Third-Party Risks
There are no debts or promises associated with physical gold. This is unlike stocks, where managers and board directors make all sorts of decisions, even to the point of embezzlement!
With gold, you can hedge against inflation, an uncertain economy, and a financial crash. Yes, of course, digital assets should be your riskier options with greater potential rewards when things are going well. But gold will step in to save you if the markets take a turn for the worse.
How to Choose a Gold IRA Company
So now you know some of the fundamental benefits of choosing to invest in gold and other precious metals. You also might be thinking that you want to explore the concept of gold IRAs further.
If so, we recommend you do some further reading on the matter, and also start to research different gold IRA companies. And, we recommend a great place to start learning about precious metals, and such companies are on RareMetalBlog.
In the link we provided above, we set you off with a solid example of a gold IRA company that you might consider using. It’s an independent and detailed review all about that company, and there are many more reviews to check out.
Invest in a Gold IRA
It should be clear to you now what a gold IRA is, its various benefits, and how you can go about choosing a gold IRA company. In the end, precious metals investing makes sense as a safer form of portfolio investment, and we recommend any investor to do it.
So best of luck and thanks for reading! If you find this post helpful, please check out our main blog for more tips and advice.