Gold Based IRA – Weigh Your Options Before Investing

Gold Based IRA – Weigh Your Options Before Investing

If you are looking for a way to properly diversify your retirement funds, then you will want to consider an investment in gold. That’s because gold has an uncorrelated relationship with the stock market. This can allow you to have smoother returns that can give you peace of mind.

Today, you can purchase physical gold and hold it in a gold IRA. However, is this type of retirement account right for you? Here, we will take a look at what a gold IRA is and possible alternatives.

What is a Gold IRA?

A Gold IRA is a retirement account where you can hold physical gold in a government-approved IRA account. The main benefit of a gold IRA account is that you can allow you can sell your gold for a profit before retirement and do not have to pay capital gains tax until you withdraw the gold. However, you will not be able to take physical possession of the gold until you reach the minimum retirement age of 59 ½.

The current maximum annual contribution for a gold IRA is $6,000 if you are under the age of 50 and $7,000 if you are over the age of 50.

Alternatives To A Gold IRA

While a Gold IRA may be a great idea for many people, you may want to consider some other alternative ways to invest in gold for retirement. Here are a couple of other options to consider.

Gold ETFs In Traditional IRA

If you don’t want to deal with buying and holding physical gold in a retirement account, then you can purchase what is known as gold exchange-traded funds or ETFs. These gold ETFs track the futures price of gold which can be brought or sold much like a stock. One of the main advantages of gold ETFs is that they are easy to trade in and out of. Also, you don’t have to deal with the storage fees that come with having physical gold in a Gold IRA. There are gold ETFs available for your IRA accounts. The most popular gold ETF is the SPDR Gold Trust (NYSE: GLD). This ETF uses futures contracts to track the price of gold. Gold Stocks in Tradtional IRA.

Gold Options In Traditional IRA

You can also choose to take any gold ETF, gold mining stocks, or gold mining ETFs and purchase options. Options are time-sensitive contracts where you are speculating on an underlying stock or ETF hitting a certain price at a certain time. Trading in options can be extremely risky and should only be considered by experienced investors.

Privately Holding Gold Bullion

Finally, you can consider holding physical gold privately. The major disadvantage here is that you do not enjoy the tax advantages of holding gold in a Gold IRA account. However, you can hold as much gold as you want. Also, you can hold your gold and sell it without any restrictions.

Should Your Open a Gold IRA? As you can see, there are several ways that you can hold gold for retirement.

However, a Gold IRA may be your best option if you are looking for a way for your physical gold to appreciate on a tax-deferred basis.

If you wish to get started with a gold IRA, be sure to talk to a Self-Directed IRA Custodian. They will be able to walk you through all the steps of starting a Gold IRA account.

REFERENCE: https://www.businessinsider.com/personal-finance/what-is-a-gold-ira