Nearly midway through 2023, inflation remains a problem. It rose 0.4% in April, seasonally adjusted, and rose 4.9% over the last 12 months, not seasonally adjusted. Depending on the next moves of the Federal Reserve, it might remain uncomfortably high for quite some time. We'll see how things play out when the CPI data for May comes out on June 13th.
It’s more important now than ever that you have a plan for your retirement and protect your wealth until then so that you don't outlive your money. Have you ever considered adding the wealth preservation powers of precious metals to your retirement plan through a self-directed IRA?
If so, there are some things you need to consider before you start seeking out IRA trustee administrators…
1. Time Horizon
How close to retirement are you? The common wisdom is that the further away from retirement you are, the more time your investments will have to accumulate wealth. The best time to start owning precious metals in an IRA was yesterday. The second-best time is today.
This doesn’t mean that a self-directed IRA for precious metals is off limits if you are closer to retirement. Yet, it is important to keep in mind that IRAs are tax deferred, not tax exempt. When you reach April 1st immediately after you turn 72 years of age, you are forced to begin taking distributions. As you get older, the percentage you are forced to take out increases, and you will be forced to take out more money at unknown future tax rates.
Whether your retirement years are quickly approaching or decades away, it’s never too late or too early to add the stability of precious metals to your retirement portfolio.
2. Insurance vs. Profit
Precious metals are perfect for an IRA because they are best for long term investing goals. Many consider gold to be a form of wealth insurance, meaning that it is a store of purchasing power, in a form with high liquidity, for a potential financial crisis you hope to never have.
If your purpose for owning gold is wealth insurance, then buying at the lowest premiums available, holding it, and letting time do the work over decades will increase your purchasing power. Core holdings should remain untouched for the remainder of your life. Once you’ve filled this quota, any additional funds you allocate towards precious metals can have some profit potential, but this is really more of an added benefit for investors who are thinking in the long-term.
Since 2000, gold has outperformed standard "paper" investment assets like stocks. Last year, when all assets deflated, gold and silver remained steady, while stock and bond markets experienced a significant downturn. In an inflationary environment, gold tends to out-perform risk assets by increasing in value at a much faster rate. While the day-to-day spot price of gold will fluctuate and the market goes through cycles every decade or so, the long-term value of gold has continued to rise in a steady, sustainable pattern over long periods of time.
3. How Much Retirement Wealth Are You Looking to Protect?
Allocating some of your funds to precious metals in an IRA will protect your retirement savings against the volatility of other riskier asset classes. You can combine gold with stocks and bonds in a portfolio to reduce the overall volatility and risk.
The World Gold Council among others has conducted a number of studies where they included various percentages of gold in portfolios with various stock, bond, and currency mixes. What they found is having roughly 8% to 12% allocation to gold tends to increase overall portfolio performance while decreasing overall portfolio risk.
If you have a quite sizeable portfolio, then diversification is essential. Holding physical gold can be done in both your personal portfolio for liquidity and accessibility as well as in an IRA to diversify your holdings.
4. Where Are Your IRA Funds Currently?
Your precious metals cannot be held by you directly; they must be held through an IRA trustee administrator in an approved depository. If you currently have a traditional IRA, you may need to create a separate self-directed IRA with an IRA trustee administrator with a working knowledge of the IRS guidelines for including precious metals in an IRA.
If you already own gold, silver, platinum, or palladium, you may be storing at home, or in a depository. Precious metals for an IRA cannot be held at home and unless the depository you work with already has an established relationship with your IRA trustee administrator, you may need to do research on finding a trusted facility that can accommodate you.
At ASI, we have been helping clients to include precious metals as part of a diverse retirement portfolio since the IRS code first allowed it in 1986, and we can help to connect you with a IRA administrator you can trust to safely and securely hold your metals.
5. Storing Offshore May Offer Safety, Security, and Cost Less
Investors may find that storage of their precious metals for their IRA in an offshore depository will offer the most benefits in terms of storage costs and enhanced security.
Another great IRA option is the Perth Mint Certificate which can be placed in a self-directed IRA. Your gold, silver or platinum is held offshore in Perth, Western Australia and is guaranteed for safety by the Government of Western Australia and is fully insured at full market value at all times at no additional storage cost to you.
Are You Ready to Consider a Precious Metals IRA?
Precious metals are an excellent option for investors looking to balance out their retirement portfolios with a safe haven asset that historically performs well in times of inflation, dollar volatility, and geopolitical uncertainty. Right now, owning gold and precious metals is one of the best hedges against unprecedented inflation.
Call us at 800-831-0007 or send us an email to discuss your precious metals IRA options.