How To Use Gold Investing To Your IRA Account’s Advantage
Saving for old age can be and often is a hazardous course. While you may save and invest prudently for much of your working life, if you happen to have your funds for old age in the wrong place, in the wrong assets and at the wrong time, you could find your pension income not being anything like what you thought it might be. Banks and insurance companies which had once seemed safe can suddenly turn sour and go under; stock markets can fall in dramatic fashion; the performance of an investment fund tied to your planning can decline under new (or old) management. (Article continues after video >>>>)
Video – A Brief History of Gold and Federal Reserve Notes
>>>> One thing for sure is that their is no certainty with retirement accounts of any sort, anywhere in the world. However, that does not mean you should not save to retire in finacial security or keep assets set aside to see you through until you are 120. It quite clearly makes sense to do so. You just need to think and act long term, and not to lose sleep over short term fluctuations.
One type of physical asset that has a very long and successful history as a tradeable commodity is gold. This precious metal has been used as a form of “money” for thousands of years. Gold has been a part of the culture of the Chinese, Indian and other ancient trading nations since long before the American Republic and British Empire came into being. It is no surprise that, as paper gold “market” prices have been falling recently, the biggest buyers of physical gold have been from India and China. In fact, the demand for physical gold has been at record levels while paper gold prices have fallen. But how does this all affect the average American trying to preserve and grow wealth for retirement and old age?
For many Americans, their most powerful investing tools are their 401k through their employer, and their private IRA. A self directed IRA can give an investor a lot of control over their choices within their IRA. One of the available choices just happens to be gold; physical gold that is. (See the allowed investments in a gold IRA.)
The good news is that there are a lot of options for people who wish to include gold in their long term financial planning. The following are the main ones:
Use a Traditional IRA Account to Invest in Gold
A “traditional IRA” is defined as an IRA that is held at a brokerage house but that is still under your personal control. Typically, with a traditional IRA, you have the freedom to invest in whatever you feel is best for you, as long as it is an option that is offered by the brokerage house that holds the responsibility for your IRA. Many funds do, in fact, even encourage their account holders to invest in gold and other precious metals because of the strong long term performance they have exhibited in the past.
Investing With Gold ETFs
ETF accounts are not actively managed by broker staff, therefore the fees are much lower than other kinds of retirement options. This makes the ETF one of the most popular kind for future retirees. With a lack of active management comes a greater degree in freedom when deciding what to invest in. This may be the best kind of account to opt for if you want to invest purely in gold, but do consider the pros and cons very carefully.
Investing in Gold Mutual Funds
Mutual funds are a different animal, because you are investing in a collective of sorts under which you do not have a lot of specific direction (if any) about the specific investing selections that are made on behalf of the whole. Many mutual funds advertise themselves as a “gold investment fund” — but what does that actually mean?
The exact definition of where the line is drawn when it comes to what a mutual fund can invest in, and still bill themselves as a “gold investment fund” is somewhat fuzzy, and complicated. In order to protect yourself , make sure to read the prospectus carefully to find out precisely what you are investing in before you hand over any of your hard-earned money — money you are depending on for post employment years.
Purchase Stock in Gold Mines
Investing in actual gold mines by purchasing stock is the riskiest gold investment item on this list, but it also has the most lucrative potential upside, as well. As with any stock, the value of the stock can either skyrocket or tank after you have invested. The best that you can make is a well educated guess.
Gold mining stock is impacted by many factors outside of the actual success of the company, not the least of which is the fluctuating price of gold itself. Just like with any investment, make sure that you do your due diligence on any gold-mining company that you are thinking of investing in prior to handing over any money.
Before you invest in a particular gold mining company, you need to investigate their history of profitability and all of the specifics that going to the business aspect of running their company. If you are making a significant investment, it can be a good idea to meet with leadership in person and possibly even tour their facility. In short, do not make the mistake of investing blindly simply because all you can is see the upside.
Leverage Your Traditional 401(k) Account to Invest in Gold
A 401(k) account is actually the most difficult type of retirement account to leverage for investing in gold simply because it is largely controlled by your employer. In some companies 401(k) set up, you do have some say in the way your particular money is invested, but generally your options are to choose from a predetermined list of approved investments. Chances are, gold is not going to be on that list. If you want to use some of your retirement investment capital to invest in gold, the most likely scenario is that you are going to need to do it with a different type of account than a traditional employer controlled 401(k).
Use Your Self-Directed IRA For Gold Investment
A self-directed IRA lives up to its name in spades. If you want to invest in gold, this type of IRA gives you the best chance to use your retirement dollars to do precisely that. As the name implies, with a self-directed IRA you make big decisions about where your money is invested.
There are, of course, regulations that must be followed, as there are with any type of retirement account. However, with this account more than any other type, if you want to invest in gold all you have to do is make that wish known to the manager of your account. It’s as simple as that.
As you can see, there are many options available to people who would like to use their retirement funds to capitalize on the popular trend of investing in gold. The great thing is, this is not such a risky investment over the long term as some other options.
By leveraging your retirement funds and investing in gold in whatever capacity is available to you in your financial situation, you could be setting yourself up for a very bright retirement, indeed.