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In 1997, the IRS made it legal to keep gold in a self-directed retirement account. But this new legislation came with many specifics regarding the products, storage, and maintenance of such an account.
Nowadays, many people are concerned about the economy. We've been through several major economic downturns in the past fifteen years, some of which wiped out huge swaths of people's retirement savings. Usually during events like this, the price of gold goes up because demand skyrockets.
So is it a good idea to have a gold IRA in this day and age?
Yes to Gold IRAs
While not everyone is interested in buying gold, there's no denying that this is an asset with unique benefits. Professionals often recommend putting part of an investment portfolio into gold because it's a hedge against various risks. But you shouldn't invest your entire retirement into precious metals.
Gold protects you against inflation, which you've likely heard a lot about lately. Inflation is especially problematic for young investors. Four decades from now, it's possible that your dollar will be worth just pennies compared to today's buying power. That's how the value of the dollar changed between 1980 and 2020.
As mentioned, gold also protects you during stock market crashes. When the value goes up, you can liquidate your holdings just long enough for the economy to recover. Then you will continue to generate passive income from your other diversified holdings, most of which will be traditional assets.
Disadvantages of Gold IRAs
There are a few disadvantages to keep in mind. One is the inaccessibility of gold IRAs. It's difficult to manage the paperwork and to become familiar with regulations. So it's helpful to enlist the assistance of a company that specializes in these things.
Gold is a real, tangible asset. Unlike digital currency, you can hold it in your hands. Unlike physical currency, it isn't tied to a central bank. It is decentralized and simple to liquidate, so many people use it as part of their emergency planning.
But the realness of gold comes at a cost. You will need to pay annual fees to keep the gold in a storage vault. The exact fees will vary depending on the depository and the type of storage. Non-segregated storage tends to be very affordable, but there's no guarantee that you'll remove the exact same coins that you put in.
You'll also pay annual fees to your custodian for managing your account. This involves auditing your holdings, generating reports, answering questions, and filing all relevant IRS documentation.
At the same time, gold doesn't earn dividends the same way that stocks do. And it's difficult to sell it for the same price that you bought it for, unless you hold onto it for a long time.
But with a diverse portfolio, those disadvantages are negligible compared to the security.
Why It's Best to Use a Gold IRA Company
A gold IRA company is different from a typical gold dealership. These companies will typically focus strongly on retirement investment products. Most Americans can't afford to buy investment bullion with their savings, but they might be able to afford a purchase using their retirement account. It's a win-win scenario.
If you work with a good gold IRA company, they can nullify many of the most significant drawbacks. For example, if they help you with the paperwork, then you don't have to worry about tracking down different applications and forms and financial information. Some companies go as far as talking to your storage company and custodian for you.
In addition, many IRA-focused dealerships already have networks with partnered custodians and depositories. Instead of having to research dozens or hundreds of options, you can simply pick from a pre-vetted set. Of course, you should always research a company's reputation before getting involved with them. But many of the most reputable IRA companies only work with well-reviewed custodians.
That's without even considering the product selection. These companies can tell you which items are approved for a retirement account. Some dealerships have no clue, and they might sell you products that your custodian can't legally accept. But IRA specialists can make specific recommendations for retirement products that have the kind of growth potential and buying power that you're looking for.
Gold investment companies also often make it easy to liquidate your holdings. Since you're investing for the future, you need a way to sell your gold. It's not the same as amassing a coin collection that you plan to pass down to future generations. So you can look for IRA companies that promise to buy back your items when you're ready.
What to Look For in Gold IRA Companies
Not every gold IRA company is the same. As with any dealer in the precious metals industry, it's important to exercise caution. Sometimes unscrupulous sellers will try to confuse or pressure you into making a purchase, even if you're using your precious retirement funds.
Another thing to keep in mind is that there's a difference between a company that specializes in IRAs and a company that happens to have IRA services. The former often have in-house IRA teams and dedicated specialists to assist with paperwork and questions. The latter often just have a section on their website for IRA-eligible products, but they don't provide any further help or communication with your custodian.
What They Won't Do
Some of these are red flags, while others are simply outdated practices. Regardless, if a company does any of these things, they probably aren't going to be a good fit:
A good company should have a high level of transparency, and you should feel comfortable talking to them. You shouldn't feel like you're constantly being cajoled or pressured into saying "yes" to buying something that you don't actually want.
Now we can take a look at some of the things that a good company will do.
The company's reputation is one of the first things that you should check. Don't just look at testimonials on the actual website. There's no guarantee that those are true. Instead, go to third party review sites like Trustpilot and Consumer Affairs. These gather verified reviews from past customers, so you can see all the negative and positive feedback at once.
It's also a good idea to look up the company's Better Business Bureau profile. There will be a rating based on their customer service, with the best rating being A+. The BBB also logs complaints and company responses to said complaints, so you can see if there are any major negative flags right away.
The Business Consumer Alliance is another organization that rates businesses, although their algorithm is more complex than the BBB's. Their top score is AAA. They award this to businesses that demonstrate a high level of integrity, transparency, and good management. If a business has an AAA, you can be reasonably certain that it's an established industry leader.
You might also look into accolades, media appearances, and celebrity endorsements. Some companies have qualifications like being members of the National Ethics Association or being a registered member with different coin grading services. The more established an IRA dealer is, the more likely they are to have good customer policies.
An ideal company will prioritize customer education above all else. Many of the best ones have free resources available for people to learn the basics of precious metals investing, retirement planning, and even how to avoid scams. You should be able to learn enough to buy gold with confidence.
Educational resources can take many different forms. When you go to a company's website, you might find articles, blog posts, and videos. Some sites show the price of gold and other precious metals in real time on a chart. Some have free kits that you can download or have mailed to you. These come with books and other resources.
The more focus that a company has on education, the more honest they're likely to be. The best company is one that truly wants to match you with the right products for your goals, rather than one that wants to trick you into buying useless items.
IRA Setup Help
There are several companies that can help you set up your IRA. The best of the best will assign you a single account representative to take you through the whole process. They'll show you where to sign, what information you need to provide, and how to file the paperwork. If you have any questions, you can have them answered thoroughly and promptly.
Oftentimes, there will be one or more partnered custodians already. You'll also have different depository options. You can talk to your representative about the choices available and which is best for you. If you want, you can also independently research each of the depositories and companies.
They should take the hassle and headache entirely out of the setup process. A good company will make IRA applications accessible even to the least experienced investor. In fact, you can even look for customer reviews specifically from first-time gold investors to see what they think of the services.
High Quality Products
To be put in your IRA, the bullion must be in perfect condition and uncirculated. You want to make sure that you're getting items that meet the purity and certification standards set by the IRS. Otherwise your custodian won't be able to enter the products into your account.
In addition to gold, it's also possible to keep palladium, platinum, and silver in your account. Some companies have a mix of all four metals available, while others chiefly focus on gold and silver.
Some people look for the most popular bullion investment products. For example, it's popular to invest in the latest minted American Eagles in varying weights. These coins have staying power and are some of the easiest to authenticate and liquidate. You can even keep proof American Eagles in your account.
Other people look for the most affordable products. While these are still compliant with IRS regulations, the coins might be minted in past years or from an international mint. You might also buy bars instead of coins.
Our Top Picks
Our top companies are all highly reputable IRA specialists with a strong focus on customer care.
Goldco is an incredible company if you're thinking about opening a gold IRA. They can take you through the paperwork in less than ten minutes. Your one-on-one account rep will go out of their way to learn about you and to make sure that you understand all the risks and benefits involved. Then they will help you lock in a purchase.
Goldco's fees are also very reasonable. The company charges just $50 to set your account up and facilitate the rollover, something that could take hours to coordinate on your own. Then you'll pay $180 yearly to your custodian and storage companies.
Augusta Precious Metals also has an impressive and convenient setup, which matches you with a one-on-one account rep. The company is divided into five teams of experts that each focus on one specific part of the buying process. So if you have a question that your rep can't answer, they can immediately get feedback from a more in-depth expert.
Augusta also has some of the best client education in the industry. Not only is there an entire library of resources on their website, but the company's leaders hold one-on-one webinars. If you sign up for one of these, you can talk directly to a Harvard-trained finance expert about your questions and concerns for your economic future.
American Hartford Gold is a key choice for people seeing an affordable IRA company. Goldco has a minimum of $25,000, while Augusta's minimum is $50,000. But AHG doesn't have any minimum at all. So even if you have just a few hundred dollars to invest, you can still put this toward gold and silver.
American Hartford Gold has an amazing reputation and is well-known for running television advertising campaigns. They also often run promotions for new customers. If you invest in an IRA and buy certain products, you might have 5% to 10% of the purchase value shipped to your home in free silver. You can ask about what promotions are available on any given day.
How to Get Started With a Gold IRA
If you want to work with one of the companies we've listed, then the process to get started is simple. None of these companies list their prices on their website, so you'll have to give them a call. You'll be matched with a dedicated individual who will answer questions and help you decide if a gold IRA is the best choice for you.
The steps are as follows:
If there are multiple custodian or depository options available, you'll ask your rep about the advantages and disadvantages of each. That will help give you a clearer idea of which choices work best for you.
While a gold IRA might not fit every single investor's needs, it is definitely an option worth considering. In fact, many professional investors strongly recommend putting part of your retirement funds into gold. This is an investment that helps to protect you, especially if you're nearing retirement age or already retired.
Gold performs well when the economy is in shambles, and it can create a "cushion" to live on while waiting for the situation to stabilize. It also grows in value as the dollar depreciates due to inflation. That's the biggest appeal for younger investors, who don't want their money to fall in value the same way the dollar did between 1970 and 2020.
There is a lot of red tape involved, though. Self-directed IRAs aren't easy to navigate for even seasoned investors. If you're not familiar with retirement planning, finance, or the gold industry, then it quickly becomes overwhelming. The ability to put gold in your retirement account might seem inaccessible.
So we recommend using a gold IRA company. These companies exist specifically to make gold investments accessible to the average person. Not only will they connect you to a custodian and help with your paperwork, but they'll also give you a choice of many different IRA-eligible products. The company's experts will answer questions and alleviate your fears. Many companies even have educational tools available for free.
Our top pick is Goldco because of how easy they make everything. You literally never have to talk to anyone except your company rep. They chase down your custodian and handle all the irritating, time-consuming phone calls. For a setup fee of just $50, that's saving you a ton of time and hassle.