What is a Gold IRA? - An Overview

Gold IRA – An Overview - The main reason you have a retirement fund is so you will have money to spend during your twilight years; but at the rate the economy is going down, can you really be sure that whatever money you have saved up will still have the same kind of spending power? If you want to make sure that your retirement will be enjoyable, then you should consider getting a gold-backed IRA account. Here we will have an overview of these increasingly popular types of accounts and why they are a great option as a retirement fund, and maybe after you read this you will be convinced to get one for yourself.

What is a Gold IRA?

As you may know, an IRA (or individual retirement account) is a retirement savings plan that provides a couple of tax breaks, making it easier for you to save up for when you retire. Now, a gold IRA is just like a conventional IRA in the sense that you will be using the amount saved when you hit retirement age, but there are many important differences and advantages as well; here are some of them:

A Gold IRA is Self-directed – In a traditional IRA you have no control as to where your money is invested; you will be entrusting your money to a broker who will then place your money on the stocks of his choosing. With a gold-backed IRA, you have full control over your contributions, you even get to choose the form of gold investment that you want.

A Gold IRA is Protects from Inflation – Paper currency will lose its value if the amount of them in circulation far exceeds the strength of the economy. In more recent years this has been increasingly evident as the US economy continues to struggle. This is not a problem with gold. In fact, the great thing about gold is that as inflation rates rise, so too tends to be its value. If you want to keep your IRA from devaluation, then you should place some of it in gold.

A Gold IRA Can Easily be Liquidated – Unlike traditional IRAs where you cannot withdraw your savings until you have reached retirement age, in a gold IRA you can take custody of the physical gold that you own; but it is still recommended that you place them in the hands of a reputable IRA custodian for safekeeping.

What Kinds of Gold Can You Place In Your Gold IRA?

There are many different forms of gold that you can put into your gold IRA, the most popular of which are gold bullion coins. These coins are mostly made of gold (there are small quantities of base metals in them to give the coins some durability) and they are minted in different countries from around the world. You can get Canadian Maple Leafs, South African Krugerrands, Chinese Gold Pandas, American Gold Eagles, and others. Gold bullion coins are 99.5% pure gold, which is the requirement for when you want to put them in your IRA.

Besides bullion coins you can also invest in other gold forms like stocks, for example, in gold mining companies; these are great because they give you a higher chance of making a profit, but they also carry much higher risks because there is a chance that the company you invest in will go bankrupt. Gold stocks are also prone to other fluctuations just like any other stock and so carries the same risks.

Can You Put Gold In Your Existing IRA?

Most traditional IRA custodians do allow their members to place gold in their accounts, but in case yours does not, then you should open a separate account with a reliable and reputable company.

By rolling over a certain percentage of your IRA into gold it becomes a hedge that will protect your savings from the effects of inflation, and it may even earn some money after some time.

These are just some of the things that make gold IRA an increasingly popular choice when it comes to choosing an IRA account. It could be a smart move in securing your financial future.

References: IRA FAQs - Investments - Internal Revenue Service