Nowadays, most people prefer investing via assets rather than keeping money in the bank. I wanted to highlight the Gold IRA Pros and Cons in this post as it is not an investment that suits everyone. Just like anything else has its both positive and negative sides, so does a Gold IRA.
However, there are different types of investing with real estate and gold IRA being among popular options. Gold IRA can hold physical gold to benefit the IRA account owner in the long run. Nevertheless, even if these IRA accounts are recommended for everyone, you should consider the range of pros and cons to determine whether or not you will invest in Gold IRAs.
This article will help you understand all about the pros and the cons of Gold IRAs to help you make the right decision.
The pros of Gold IRAs
1: You have a guaranteed financial future
Gold IRAs offers the exact value even if you have held gold for a long period of time. Therefore, you don’t have to worry about inflation or if the gold will lose value if you have an IRA account. Most people who have invested in Gold IRA accounts have peace of mind because they know that the value of their physical gold cannot vary that much. This has been clearly established because the historical record of gold shows that the value of gold either keeps pace or outperforms the accepted rate of inflation in the long term.
Therefore, people who are interested in safeguarding their future tend to obtain physical gold. However, most people do not understand about investing in gold or the reasons why they should have a Gold IRA.
For instance, if you want to buy physical gold and keep it at your home, you need to buy and install a home wall or store safe. Alternatively, you need to open a safe deposit box at your local bank to safely store the gold. Remember, if you open a safe deposit box, you will have to pay a given amount of money for the storage services. It is advisable to have a Gold IRA because you will neither be buying the gold coins yourself nor pay high premiums when buying the gold coins. Instead, you will have a gold IRA administrator who will buy the coins from the coin dealer. You will eventually have the inventory as well as the gold coins safely in your deposit box.
2: The IRAs offers your retirement portfolio an upper hand
Most advisors recommend that one should keep his retirement assets in the combination of stocks and bonds only or mutual funds depending on your asset classes. When you invest in any of these asset classes or in mutual funds, you will be offered percentages which can be adjusted with time. In this case, your retirement assets will be exposed to two asset classes (stocks and bonds) which are correlated and can vary with time.
Gold, on the other hand, is uncorrelated alternative asset class which you can invest in and it does not decline like stocks and bonds. Stocks and bonds can crash and burn thus you end up losing your retirement assets but gold holds its own intrinsic value and it can never burn and crush to nothing! Therefore, if you invest in a Gold IRA, you have an advantage over those who have invested in stocks and bonds.
3: Gold IRAs offers disaster insurance for your retirement portfolio
Gold IRAs can insure you against geopolitical and financial factors that might affect you in the future. You may not be able to evade some of these factors and whether you like it or not, they may end up affecting your financial stability. However, if you are looking to insure your retirement portfolio, having a Gold IRA is the best option because gold is not affected by inflation. Some of the factors that you might be insured against include:
- Market uncertainties
- Political instability
- A systemic or financial collapse
- Unparalleled government spending
- Ravages of inflation
- High debt levels
The cons of Gold IRAs
1: You may not access your gold holding inventory physically
Since you will not be the one buying the gold coins, your IRA administrator will do it for you and keep an inventory. However, if you inquire to see your gold holdings physically, most IRA administrators will not accept because they might be hiding something from you. However, if you are persistent, the IRA administrator will give you the phone number, address and the website of the vault. It is important to understand that this is a way to keep you away from him or her because you cannot be allowed to see your gold holdings physically. Therefore, you will have to trust the info provided by your IRA administrator. This is one of the reasons why you need to work with a reputable depository company and IRA administrator.
**See our top 5 list of recommended Gold IRA companies here
This is highly recommended to avoid a scenario where the IRA administrator will flee with your precious metals or you later find out that your depository has gone bankrupt. There are reputable companies and IRA administrators who will offer professional and reliable services all along. Take your time to look for such companies, get referrals from close friends and finally be sure that they are legit and reliable before you start getting into business with the company.
Gold IRAs are long term
To open and maintain a Gold IRA account can be quite expensive and thus not a good idea for people who are looking for a quick profit. If you are looking to make fast profits on gold prices, you can buy a major gold ETF because they are affordable.
If you open a Gold IRA account for a short period of time, you might incur a loss because the fees associated with buying and selling physical gold is quite high especially if you are doing it in small moves.
Gold IRAs do not provide either dividends, interest payments or any other yield
For those who invest in stocks and bonds, they provide dividends and interest payments respectively. However, Gold IRA only offers returns via a capital appreciation for your holdings depending on the prices of gold or other precious metals you have in your deposit. If you are patient and have a good strategy, you can get good returns in the long run.
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I hope you found this short article on the different pros and cons of gold IRAs to be helpful and please share your own experience and any questions about this below as I would be more than happy to answer them!
Sincerely,
Michael,
Founder of: Gold Retired
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