A gold IRA is a self-directed Individual Retirement Account that an investor can choose to purchase physical gold and other precious metals.
There are three different types of individual retirement accounts: traditional, Roth, and self-directed. Traditional and Roth IRAs operate like any other standard retirement account by allowing you to defer income taxes on money put into these accounts until they are withdrawn during retirement. The main difference between a Roth IRA and a Traditional IRA is how much you contribute annually. With a Traditional IRA, your contribution can be as high as $5,500 for 2012 if you earn less than $116,000 per year. With a Roth IRA, your annual contribution limit begins at zero because their contributions are made on an after-tax basis.
Usually, with these types of IRA, you will have a list of approved investments that you can purchase for your accounts, such as stocks, bonds, and mutual funds. Investors can also choose to buy physical gold and other precious metals if they want through a self-directed IRA. These metals include everything from silver ingots to platinum bullion bars. Like stocks, the price is determined by supply and demand, but there is no paper certificate proving ownership of the metal. This means investors must store their metals or find a custodian company that offers storage services for a fee – usually around one percent per year of market value.
In most cases, using Gold IRAs is a better alternative than simply purchasing gold as an investment. This is because gold IRA accounts allow you to save for retirement by diversifying your portfolio with the traditional asset-allocation strategy, which means adding other types of investments such as stocks and bonds to help balance out the market fluctuations.
Maintaining a Gold IRA account can be beneficial not just during retirement but throughout your entire life. For example, an investor’s goals could include funding future education expenses for their children or securing their family’s future if something should happen to them or their spouse. A self-directed gold IRA gives you the tools and access to invest in anything that fits into specific requirements set by the IRS regarding precious metals and other approved investments, without any limitations from anyone else.