Preparing for retirement is a must, the earlier, the better. Besides starting time, another crucial aspect of the plan is the instrument. (Read here for more). The right instrument will generate more benefits than others will. Lately, among several types of the IRA, gold and silver have been in the hype. Yet again, what is gold and silver IRA in the first place?
Individual Retirement Account (IRA) refers to the retirement plan offered by financial institutions which have tax advantages as a saving. The gold and silver IRA is also similar to other types of IRA, but the owner could possess physical bars or coins stored by a custodian. An IRA is self-directed, so the owners can make any decision they want. This precious metal investment also includes platinum and palladium.
Among other types of metal, gold and silver are known as the best to resist inflation. They could give five times the profit and even more. An example is gold’s price in 2000 that was $200 per ounce. It gets multiplied in 2017 by $1,200 per ounce.
For a long-term plan like retirement, this investment surely has a good profit opportunity. If you are interested in investing in them, here are some tips that you can do to get the most advantages.
Find Trustworthy Companies
Nowadays, there have been dozens of financial institutions that offer service in gold and silver IRA as a custodian. It might be confusing to choose the trusted ones. The easiest way to sort them out is by checking their experience and ratings.
Also, check on independent sites that write about honest reviews. Upon the reading, you might find several names like legit company Lear Capital and more. You can also check their transparency about the mechanism, fees, penalties, or any questions that you have.
Last but not least, avoid any companies with exaggerating advertising like gets doubled-up just in a few years. Scams are real, and you must be aware of them. Otherwise, you will miss not only the profit but your money as well.
Compare The Costs
Storing your gold in a custodian for years requires some amount of money. There are even several fees from opening an account to liquidate it. They include account setup fees, custodian annual maintenance fees, sellers fees, storage fees, insurance fees, wire transfer fees, cash-out fees, and penalty fees (if you broke any rules). Some of them are paid once, and others are regularly.
There are several factors in determining the amount of each type like the storage facility, gold bullion form, institution’s services, etc. Finally, you need to bear in mind that the sum of those fees is not a small number. Making the calculation of a ten-year fee for each company is a good technique to see which one costs more and less.
Diversify The Instrument
Despite the ups, gold, and silver IRA must also have other downsides, just like other instruments. The best way to tackle the disadvantages of an instrument is by diversifying your investment. Therefore, when an instrument gets red, other instruments’ profits could cover the loss. This shall apply to your retirement account too.
Other than precious metals, in your IRA account, you can also add stocks, bonds, mutual funds, or you can invest in other instruments like real estate and commodities. To get some references which instruments you should choose, you can do your own research and consult your financial institution. Some of them also offer different types of instruments. The ideal number of gold and silver in your IRA is 15-20% of the portfolio.
Prefer Coins To Bars
There might be a debate about choosing bars or coins. While bars could give a larger amount of money on each investment, however, they are also difficult to liquidate. Their high prices make them difficult to see. Also, they are heavy to move and need more security during transport. Another downfall is that they are easy to be counterfeit.
On the contrary, coins are easier to liquidate. With slightly lower prices, more people are ready to buy it. The maintenance and transport fees are also less.
Be Aware Of Age Rules And Maturity
To avoid any penalties and loss, calculate what time is the best to sell your precious metal. Make sure that you have reached the ‘maturity’ or a time where the profit at least has covered all fees. Then check your age. Some companies demand the clients to be 59 and a half at least to withdraw the IRA.
Buy The IRS-Approved Metal Only
Not all gold and silver are recognized in your country. The example includes Swiss 20 Franc, South African Krugerrand, French 20 Frand, and more. Yet, there are also eligible gold and silver IRAs such as American Gold Eagle, Chinese Gold Panda Coins, British The Queens’ Beasts, and others (link: https://en.m.wikipedia.org/wiki/Gold_IRA).
Though you already buy them, you are not allowed to add them to your IRA. Such things are usually informed by good financial institutions like the legit company Lear Capital. In fact, the only party who can buy and add gold or silver to your account is the custodian.