Adding gold backed iraas one of the assets in your investment retirement portfolio has become increasingly popular in recent years, as investors become more concerned about high inflation and the falling dollar eroding the value of their savings. If you are interested in setting up a gold IRA, here are some of the things you need to be aware of:
- Make sure that you have the right IRA plan. Not all IRAs allow gold as one of the investment assets, so you may have to roll over all or part of your original IRA into a new account. Eligible IRAs include Roth, SIMPLE and SEP. You can also roll over your eligible 401 (k) into your gold IRA.
- Know the type of gold products that are allowed as part of your gold IRA. For example, the IRS allows you to invest your IRA funds in gold coins but only if they have a 0.995 fineness, unless they are American Gold Eagles. You can also invest in gold bullion if it has the same fineness.
- Find a good IRA custodian. Your custodian will provide you with the investment advice that you need as well as making you aware of what other options are available to you for investing in gold. For example, you can also invest in gold mining companies.
- Locate a secure depository for your gold holdings. You are not allowed to keep your gold at home but in a separate facility. Apart from the storage fee, you will also have to pay for insurance.
- Don’t hold all your investments in gold. Gold should only be used as part of an investment diversification strategy in which you hold a variety of assets. This will help keep the value of your investments safe as the assets perform differently under various economic conditions. For example, you can also consider other precious metals such as platinum and silver as well as the traditional stocks and bonds.
Finally, keep in mind that gold is not a liquid asset and once you have to start taking distributions from your IRA you may have to sell some of your gold. This means that you will need to have your gold revalued periodically so you can compute your minimum annual distribution. You should also remember that while gold holds its value and thus serves as a good hedge against inflation, as an investment, it does not provide income.