During times of political instability, recessions, and economic uncertainty, the benefits of investing in a gold IRA is becoming more apparent as retirees, preppers and serious investors rush to open gold IRAs as a safe option. It can be used to hedge against currency devaluation or inflation. The financial security of retirement funds is at the foremost of many people’s minds. Having an assurance of stability in the face of instability gives peace of mind to investors.
Is gold a good retirement investment?
Absolutely, an Individual Retirement Account is one of the best retirement investments you can make to withstand economic turmoil, inflation, and catastrophic world events. Gold remains valuable because of limited supplies and increased demand especially as gold mining has leveled off since 2016. According to the World Gold Council (WGC), there was a demand for 4282 tons of gold per year between 2008-2017.
Investing in a Gold IRA, you will diversify your retirement portfolio on a tax-deferred basis and maintain the tax preferential treatment. This means that transferring or rolling over a portion of your existing IRA account into a Gold IRA will not trigger any tax implications.
The benefits of having gold or other IRA-approved precious metals as a part of a retirement plan are numerous and well-documented. Further, the United States Securities and Exchange Commission advises diversified retirement investments as being a safe way to manage financial risks and attain financial security after retirement.
WGC indicates that world events like the Ukraine invasion and soaring inflation will continue to drive gold demand and price. The gold market is only increasing as many central banks have been accumulating growing reserves of gold, bringing it nearly to a 30-year high. By adding diversification to a retirement portfolio, investors shore up their investments against fluctuation in the market.
Gold IRAs are one way to bring diversification to a retirement portfolio that would otherwise rely too heavily on traditional paper assets. Gold and other precious metals are part of a long-term, balanced investment approach and well-suited to a retirement portfolio.
Financial Stability in Retirement
The US dollar is stronger than it has been in 20 years and Gold acts as a measure of stability compared to other assets. The U.S. dollar is no longer backed by gold or any other precious metal, and Federal Reserve notes have not been redeemable for gold since 1934.
Not being tied to our currency actually makes it safer for investors. Luckily, a strong U.S. dollar tends to keep the price of gold lower for purchasing purposes. Meanwhile, a weaker dollar tends to drive the price of gold higher because you can purchase more gold when the dollar is weaker.
Many investors believe in the permanent worth of gold. Throughout the history of civilization, humans have always valued and coveted gold. Keeping gold as part of your retirement investment gives the feeling of stability and permanence to wealth. Historically, gold has done well in periods of instability and economic or political turmoil.
The worth of gold tends to follow an inverse relationship to the worth of paper assets. When traditional assets are struggling, gold does well in comparison. Similarly, the worth of gold doesn’t do as well when the market is booming. This balance, combined the the stable worth of gold, brings true balance to a retirement portfolio.
In addition to the benefits conferred upon a retirement portfolio by gold, the tax and control benefits of a self-directed IRA are also available to investors. You can continue making contributions to your traditional gold IRA account until you reach the age of 70.5. After that, only Roth IRA contributions are allowed. Withdrawals are also tied to your age.
Though you can technically withdraw funds from your account at any time, doing so before age 59.5 will mean a 10% penalty. At age 72, you’ll also need to start taking required minimum distributions. After opening your gold IRA account, you can only contribute up to the approved IRS limit.
Since the financial crisis of 2008 and the housing market crash, investors have shown an increasing interest in Gold IRAs for the stability and balance they lend a portfolio. In addition, many Gold IRAs can contain other types of assets beyond just gold and precious metals.
For a deep dive into what a Gold IRA is and how it works, read our “Best Gold Company Review 2022” where we also review one of the top Gold IRA companies of 2022, Augusta Precious Metals. If you want answers to our most common questions then visit our Q&A page here: 11 top frequently asked questions