What is a Precious Metals IRA?
It’s a known fact that stocks and bonds can be among the riskiest investments you can make. And when you’re investing for your future through a traditional IRA, risk is not a good feeling. With a precious metals IRA, you can harness the benefits of gold and investments in the form of a retirement fund.
A Precious Metals IRA is essentially a Self-Directed IRA. Investing is your choice, and can be of any IRA-approved products. Any profits from the sales of your investments can be tax deferred, just like any profits from any IRA, as long as you keep the proceeds from your sale with your custodian for reinvestment or transfer the proceeds to another IRA account.
What Does a Precious Metals IRA Mean for You?
With a precious metals IRA, you can essentially transform your retirement investment into a 100% tax-deferred asset. That’s right, as of 2009, over a 12 year period, gold investments for IRA funds have increased in value 30-fold over traditional investments.
A precious metals IRA allows you to buy and sell gold, silver and other precious metals in a special custodial IRA account, harnessing the power of your precious metal investments towards your retirement.
What are the Advantages of Precious Metals IRA?
“Diversification is good in a portfolio. You don’t want to hold all of one sector or (market) cap or asset,” says Megan Petruska, director of portfolio research and advisory at McMahon Financial Advisors in Pittsburgh. You want holdings “that will almost play against one another,” she continues.
“Gold tends not to move in the same direction as U.S. stock prices, which means it provides a cushion…during times of stock market corrections,” says Henry To, partner at CB Capital in Newport Beach, California. According to To’s calculations, “Over the last 45 years, U.S. stock prices were in downtrends or corrections during 10 of those years, or about 22 percent of the time. During that time, gold outperformed the S&P 500 by 45 percent on an annualized basis.”
“When people look for a store of value, a currency hedge, a way to protect their wealth, they go to gold,” writes CNBC. Physical gold and silver are the ultimate assets for wealth holders looking for an additional layer of security.
#3 Growth Potential
Look at this chart that shows the potential of gold’s growth over time:
#4 Tax Advantages
Like all IRA holdings, writes the Journal of Accountancy, gains from gold sold within an IRA are not taxed until cash is distributed to the taxpayer, with distributions being taxed at the taxpayer’s marginal tax rate. While highlighting the opportunities for gold owners to increase their after-tax returns via an IRA, the Journal also compared two hypothetical taxpayers, finding a “significantly higher after-tax rate of return for any form of gold” held in an IRA, rather than in a brokerage account.
In summary, the Precious Metals IRA is your best bet and hedge for not only preserving wealth, but consistently growing it and this will only continue.