A gold IRA is a self-directed Individual Retirement Account (SDIRA). More specifically, it allows for investing in eligible precious metals with one’s retirement savings. All these happen in line with laid down rules by the IRS (Internal Revenue Service). Other investment possibilities with SDIRA include:
- Real Estate
- Cryptocurrency
- Private Businesses & Equity
- Agriculture
- Tax Liens & Deeds
- Private Lending & Promissory Notes
- Oil, Gas, & Mineral Rights
- Limited Partnership & Hedge Funds
You can watch this video for more information on SDIRA. However, the focus here is on the kind that allows for investing in precious metals considering the combined benefits of investing in these assets and the privileges of the IRS-regulated IRA scheme.
Having a viable hedge against inflation even in periods of economic uncertainty is one such benefit. Another is the several possibilities of diversifying one’s investment considering that there are four IRS-approved options and several products under it.
Eligible Precious Metals for Gold IRA
Gold is unarguably the most popular and investment in it using the IRA scheme also happens to be quite common among account holders. The popularity has made it such that many substitute the term precious metal IRA for gold IRA.
The point here is so that you also know that the term does not always mean the exclusive investment in gold using the IRA scheme. It could also imply investment in other eligible options. Having made this clear, the eligible precious metals that can be invested in are:
Gold
This should come as no surprise given its rich history as an investment asset and a viable one at that. It has emerged as the cornerstone for precious metal investment to a large extent given its track record of retaining value, especially during periods of economic and political uncertainties.
Silver
The rush is for gold for the most part. However, its inherent value and several factors including demand usually mean that it is costly. As a result, it is beyond the reach of some people who need to look elsewhere for something more affordable but not shy of return prospects.
Such account holders can turn to silver as it is usually more affordable. By the way, its affordability compared to gold should not be mistaken for a lack of growth potential as it has so much to offer in that regard. Its huge demand across various industries is one of the justifications.
Platinum
Rarity is one of the things that make platinum worth seriously considering. Its scarcity, despite increasing demand, especially in the automotive industry, means that it has long-term appreciation prospects. However, one needs to be aware of its short-term price volatility record and make informed decisions based on that as well, among other things.
Palladium
Investors can be certain that they have not seen the end of its investment prospects. This is clearly because it is an emerging metal compared to other IRS-approved options for SDIRA investment purposes.
For example, the intensity of environmental sustainability initiatives at various levels continuously increases its demand. The automotive industry is one of the major industries that have increased its demand considering how instrumental it is for catalytic converters.
Choosing the Right Precious Metals for Gold IRA
Portfolio diversification is one of the major advantages of investing in precious metals. This is because the four options that can be invested in have unique investment portfolios that can be leveraged.
As a result, IRA account holders that invest in all four can benefit from the uniqueness of all of them. However, investment has to be well-informed, and here are some tips to steer you in the right direction:
Deal with the Right Gold IRA Company
Fruitful Gold IRA investment is more than just selecting the right precious metals, although this is equally a huge part of it. It is also about dealing with the right service providers.
Choosing the right Gold IRA Company is high on the list of the right things to do. For one, it helps you properly navigate the processes of how to start a gold IRA without complications whatsoever. Some other reasons include for:
- Regulatory Compliance
- Transparent Fees & Pricing
- Easy Rollover & Transfer Process
- Customer Support
- Investment Flexibility & Product Selection
- Easy & Favorable Asset Liquidation
- Proper Security & Storage Options
A lot depends on the service quality of gold IRA companies chosen. By the way, choosing the right company can even leave better informed about the right precious metals to invest in. This is because providing educational resources is one of their responsibilities.
Considerations for Precious Metal Types
All four (4) IRS-approved precious metals have what they are best known for in the investment context. Gold is best known for stability, silver for its relative affordability, palladium for its increasing growth potential, and platinum for its long-term value. What these precious metals are best known for can partly inform your investment choices.
Investment Goals & Risk Tolerance
Investors with high risk tolerance, provided the potential returns are huge, will find investment in two of the four precious metals more appealing – Palladium and platinum. On the other hand, conservative investors who would only take minimal and conservative risks would see silver and gold as more stable.
The point is that one’s risk tolerance should be properly reflected in one’s investment goals. This should ultimately inform the choice of precious metal to invest in.
IRS Requirement for Precious Metals in an IRA
The IRS is the oversight authority for the IRA scheme. Some of its requirements include:
Purity Standards
IRS-approved precious metals – gold, silver, palladium, and platinum; must all meet set benchmarks in terms of purity standards. For gold, the benchmark is 99.5 percent; for silver, it is 99.9 percent; while it is 99.95 percent for both palladium and platinum.
Storage
Self-storage is not permitted as it is interpreted as withdrawal. By the way, there are penalties for early asset withdrawal. Storage in a depository is what is expected, and it has to be approved by the IRS.
Acceptable Forms
IRS-approved precious metals in certain forms are unacceptable. For example, while gold, silver, palladium, and platinum are accepted in approved bullion bars and coin forms, the same cannot be said for jewelry and collectibles.
Conclusion
Retirement security is a huge possibility with a Gold IRA. However, investment in the right precious metals is a necessity, which is why the details shared here are important. Consultation with a qualified financial advisor is also advised in the spirit of making the right investment moves.
