Conventional IRA's have started to become rather risky investments, especially since the last financial crisis that was affecting the economy of many countries. Fortunately, there is a way for you to protect your investments until you retire, and that is by investing your current IRA in gold.
This precious metal has always been an accepted form of currency ever since ancient times, and even today, investing in gold is the best way to protect your assets. For the past 10 years, gold has performed strongly, year on year. At the moment is really is a hot commodity. In this article you will learn about how investing in gold can help you prepare for your future.
The Conventional IRA and the Dangers Surrounding It
If not for rapid inflation, the conventional IRA (that most people have) would have been enough to save the money so that you can enjoy your retirement. But since paper currency is rapidly decreasing in value, regular retirement accounts are no longer as safe as they once were. There are many reasons why conventional retirement plans are now very risky, and here are some in brief:
Inflation – When the economy of a country is not strong enough to back up the value of its currency. This is what is happening in the United States these couple of years, the dollar simply does not have the same kind of spending power that it was once had. Inflation will also affect the money that you saved up in your IRA, so when this rapid rate of inflation continues, there will come a time that your money will not be worth the paper that it is printed on (we are also seeing this trend in some European countries).
Early Withdrawal Will Cost Money – The problem with IRAs is that when you withdraw your contributions prematurely they will be taxable. This means that the earnings that your IRA has accumulated so far will disappear in an instant. Which is why it is important to determine if you can actually afford to invest your money in an IRA before going through with it.
Reasons Why Gold is Better
The great thing about gold is that its value pretty much remains the same in all countries of the world. In fact, so much so you can say that this precious metal is almost impervious to inflation. To give you a better idea on why it is better to invest in a gold retirement plan, here are a couple of additional benefits:
Security – There is a world standard on the value of gold, so even if one country’s currency starts to lose its value, the gold within will not be affected. So, if you put your money in gold, it will only appreciate in value (as it has done for the past 10 years). Another reason why gold is such a great investment is because it can actually be considered as a commodity rather than currency. So it can be traded in the world market.
Diversity – One of the qualities of a good retirement portfolio is diversity in investments, so instead of just putting your money in stocks and other generic investments, you should also put a part of it in gold. Another reason for placing part of your retirement fund in gold is because it serves as a hedge to stop you from losing too much money in case your other investments do not go as you first planned.
Liquidity – A strong benefit of investing in gold is that it can easily be liquidated anywhere in the world without any taxes. So if you invest your IRA in gold, you do not have to worry about fees because of early withdrawal.
Profit – As it was said before, gold has the particular characteristic of only going up in value as time goes by, so your initial investment will be sure to yield profits. But if you are looking for huge profits in a short amount of time, then look elsewhere. Gold is a long term investment and not some get-rich-quick ploy.
One way you can actually make a respectable profit using gold is by not investing all of your IRA funds in gold, only part of it. This way, you have the opportunity to make a profit, while at the same time protect your assets from taking to much of a plunge.
How to Get Started
For gold IRA beginners like you, it is advisable that you first invest in gold bullion coins. Gold coins are not just easy to come by, their small physical size also makes them easy to transport and store away. There are different gold bullions that you can invest in like the American Golden Eagle, Canadian Maple Leaf, Mexican Gold Peso, South African Krugerrand, and others.
Bullion coins are recommended because their value is determined by the amount of gold that they contain unlike collectible gold coins and jewelry which have other factors that affect their retail value. For instance, with collectible gold coins, you pay extra for the rarity and the demand for the coin; you are actually paying more than the coin’s gold value.
And another reason to stay away from gold collectible coins and jewelry, especially if you do not have any intention of being a collector, is because their value depreciates depending on the demand for the items. Once you have some experience in dealing with gold coins, then you could start investing in other forms of gold like bars and even gold mining stocks if you wish.
You should start planning for your retirement as soon as possible, it is never too early. One of the things that you need to think about is where you will be investing your hard earned money, especially now that the economy is not really in great shape. If you are worried about losing all of your IRA because of inflation, then you should put your money in something that is inflation-proof, and that is gold. In these uncertain times it is unwise to entrust your future in risky paper currency, by putting them (or part of it) in gold, you are basically ensuring that your retirement fund has a solid base.