Is gold a good investment for retirement? Should I consider buying some gold or should I forego the idea of doing so altogether? What can I expect as a gold investor? If you are a senior and are trying to establish an investment portfolio in which you think gold might be a viable option, then this post is for you. Read on till the end to find out whether you really need to consider investing in gold:
As you age, then considering more smart and low-risk investments becomes a priority. Not only does your lifestyle during your retirement years depend on it, but it also affects your legacy as an individual.
Opening a gold IRA has been suggested as one of the low-risk ways that an individual can invest as a senior, which in itself presents an opportunity for one to protect their assets and grow their earnings. Gold IRAs make it possible for you to buy precious metal assets such as gold, silver, platinum, and palladium, which is a change from the regular traditional investments such as stocks, and bonds.
This article will take you through what it entails to invest in gold through a gold IRA. Why a gold IRA? You may ask. My response is that we have done comprehensive research on this study and established that when it comes to investing in gold using a low-risk approach, you have the best shot at achieving this if you purchase physical gold. A gold IRA is a tax-advantaged investment structure that you can turn to if you want to hold physical gold.
This does not mean that I discredit other gold investments as not worth considering. You should, in fact, talk to your financial advisor, to get their opinion on this subject before making your investment decision. For the sake of today’s article, however, I will take you through investing in gold through an IRA, an approach that has been known to gold investors for over 3 decades now.
What is a gold IRA?
A gold IRA is a type of self-directed individual retirement account (SDIRA) that is mainly used to hold precious metal assets. You can use your gold IRA to hold gold, silver, platinum, and palladium assets in their various forms, including bullion coins and bars. You can also use the gold IRA to purchase other assets, including:
- Real estate
- Promissory notes
- Agricultural products
- Private stocks
- Tax liens, etc.
How do I open a gold IRA?
To open a gold IRA, then you will first need to find a reliable custodian. A custodian is a company or institution that is approved by the IRS to handle IRA owners’ paperwork and reporting needs.
Once you have found the custodian, and they have helped you create your account, the next step lies in funding your account. You can fund the newly opened gold IRA through any of the following methods:
- Cash transfer from your bank account – you can write a check, do a wire transfer, or use a credit card.
- Gold IRA Rollover- if you have an existing retirement plan, you can consult with the gold IRA expert ( or simply the representative at the gold IRA custodian company), as to whether that account qualifies for a Gold IRA Rollover. With a gold IRA rollover, you get to transfer some or all of the funds in your existing retirement plan to your gold IRA.
Next, you should choose the precious metals you intend to purchase, as well as the dealer you intend to purchase them from. You will then direct your custodian to purchase the metals using the money in your account.
Upon purchasing the precious metals, the custodian should have them transported to the IRS-approved depository of your choice. You are not allowed to store the gold you purchase through a gold IRA in your home safe or deposit box. Storing your precious metals in any other type of storage besides an IRS-approved depository is perceived as a withdrawal, and it attracts the due taxes and penalties as stipulated by the IRS laws and regulations.
You should, as such, run as fast as you can if you come across any company that suggests that you open a “home-storage” gold IRA. Turning to such a company could be the beginning of a very toxic relationship with the IRS, and could deny you the opportunity to enjoy your wealth in retirement.
Is gold a good investment for retirement?
For starters, I would like to say that this is dependent on what you hope to achieve through your retirement investment portfolio. Every asset in your portfolio should have a positive contribution to you, but you ought to be careful about how you do the asset allocation. Gold, in my opinion, will be a good investment for you in retirement, if you hope to achieve the following:
- Hedge your investment portfolio against inflation
- Diversify your portfolio
- Safeguard your assets from the downsides of geopolitical tension such as wars, terrorism, and economic sanctions.
- Experience the steady growth of your wealth.
The above-listed advantages of gold are worth tapping into, more with the state of the present-day economy. I must, however, state that investing in gold has its risks, as is the case with other types of assets. Should you decide to invest in gold, therefore, my advice is that you only allocate a small portion of your funds to gold.
There is no defined percentage that every investor should stick to ( this differs by investor’s needs), but you can hold anything between 5% and 15% of your portfolio in gold.
I usually recommend investing in physical gold if one is trying to add low-risk conservative assets to their retirement portfolio, but if you can stomach greater risks, you can also check out what gold funds and ETFs have to offer.
These gold-based paper assets will enable you to gain exposure to the movement of gold prices in the market, but may also be affected by the market forces that affect stocks, hence may not protect you if there is a stock market crash.
Frequently asked questions on “Is gold a good investment for retirement”
1. Can I buy gold futures for retirement?
Depends. If you are a conservative investor, then I would recommend that you do not buy gold futures. With gold futures, an investor is usually given the right to purchase gold at a set price, at a certain date in the future. The investor is required to speculate on the future prices of gold, which is something that is best left to seasoned investors. If you choose this path, then you have to accept the high risks that come with the gold futures. My advice still holds that as you age, it is advisable to steer clear of the riskier investments.
2. How does gold perform as a long-term asset?
Physical gold has been found to perform consistently well over the long-term horizon. In the short term horizon, however, the prices of the shiny metal may be quite volatile. Investing in physical gold should as such be viewed as an opportunity to grow one’s wealth steadily, and anyone who invests in gold for this reason solely must, as such, understand that the price movements of gold over the short-term horizon may not always be appealing.
3. What about silver?
Well, if you do not have so much faith in gold, then you can consider purchasing silver. It is a cheaper alternative to gold ( it is actually referred to as the poor man’s gold), but is, however, more volatile. It is for this reason also referred to as gold on steroids. Whenever there is an increase in the price of gold, there is a greater increase in the price of silver. Whenever there is a decrease in the price of gold, there is an even greater decrease in the price of silver.
4. Where can seniors open a gold IRA?
If you are a senior who perceives a gold IRA as a must-have, then you can shop around for the most ideal option. You will need to compare features and elements such as fees, customer experience, and consumer trust ratings.
Here are some companies you can check out as you get started.
That will be all for this post on whether gold is a good investment for retirement. I hope you found it informative, and that you now know whether this asset is worth considering. If you have more questions about today’s topic, you can drop them in the comments section below and I will get back to you ASAP!
I wish you well,
Eric, Investor and Team Member at Gold Retired!
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