You have probably seen adverts admonishing you to invest in gold. This is because precious metals like gold are timeless and valuable. Along with silver, platinum and palladium, they have proven to offer protection against a fluctuating money market.
The thing about them is that they typically are not affected by inflation. They are not as volatile as stocks or other paper-based investments. You can read more about precious metals in this article.
As it is, there are Internal Revenue Service (IRS) approved procedures for investing in precious metals. This is by way of gold Individual Retirement Accounts (IRAs). This is a convenient and legal way to buy precious metals and diversifying investments. It also helps an investor to hedge against inflation and other unstable market forces.
Why Gold?
Gold is a valuable commodity, and it has a rich history in terms of quality and value to humans. It has a strong economic worth making it a way to insure your money against market forces. Gold does not diminish in value neither does it corrode, and it has a wide range of uses.
Asides from its economic value, it is used for making jewelry. It is also used in electronics, medicine and dentistry, construction and for making statues, plaques and medals. Buying gold is a way of preserving wealth as well as perpetuating it for generations.
What About Gold IRAs?
A gold IRA is much like a regular IRA. Instead of putting it in paper assets, they hold physical precious metals in the shape of bullions, bars and coins. These accounts are held with the IRS, and they are self-directed. This means that they can be used for other investment options asides from paper denominated ones.
This can include digital and intellectual assets as well as real estate. Gold IRAs can as well be used to manage other precious metals like palladium, silver and platinum. Gold is just used to name the account because it is the most commonly purchased.
For the reasons above, you can come across various descriptions for the account. They may be called self-directed IRAs, alternative IRAs or silver, palladium or platinum IRAs.
While traditional IRAs are easy to set up and manage, gold IRAs require more technicalities. This is because of the IRS codes that you have to follow. To operate one, you need to have an approved depository for your precious metals.
The IRS code specifies how to store precious metals. You may be able to store it by yourself if you have the necessary facilities to do so. Most people typically use third-party depositories for storing their precious metals.
Asides from a depository, you will also need a custodian to help you manage your portfolio. Every IRA must have a custodian as per the IRS. For this, you need a reputable IRA company. Most custodians often have the word “trust” as a part of their name, but banks are also allowed to be custodians.
What Gold IRA Companies Do?
There are many IRA companies available for you to work with as well as several options on how you can invest. With these many providers available, it is important to choose a reliable one as not every one of them is credible. It is also important that they follow the IRA regulations, so you do not run into any issues.
Some of the duties of a custodian include keeping records and providing reports to the IRS and their clients. They also issue funds for investment purposes as the client directs them. Additionally, they get out any required disbursements while handling things that have to do with compliance for their clients.
Custodians may also provide information and materials to educate both potential and current clients on how to invest in IRAs. They may provide secure online platforms for clients to easily manage their accounts. They can as well provide their clients with recommendations on how to buy metals, secure them as well as store them.
Note that it is uncommon for companies offering other kinds of IRAs to also offer precious metals IRA. This is because of the complexity involved most times.
Fees Charged By Gold IRA Companies
Custodian companies have a range of fees they charge, and you must know this before dealing with them. You should request disclosure of all their fees for any company you explore. As a guide, here are some fees that custodians may charge.
Startup Fees: This is a fee charged when you are opening an account with them. It is a one-time payment and may be referred to in other terms like application or set-up fees.
Annual Fees: This amount is paid on an annual basis, and it is meant for maintenance and administrative purposes on your account. It is what they get for managing your portfolio, keeping records and reporting to the IRS and you.
This amount can be a percentage of the value of your asset, or it may be a flat fee. It can also be charged bi-annually or quarterly.
Shipping and Storage Fees: This is the cost associated with shipping your precious metals and storing them in a secured facility approved by IRS. Although companies that handle this differ from the custodians, they are usually paid through them.
Transaction Fees: These fees are charged based on services or transactions that are not covered by the annual fees. Examples of these include wire transfers, cashier checks, corrections on IRS Reporting and stop payment fees.
You may read more on Gold IRA investments and the different fees they charge here https://www.investopedia.com/articles/personal-finance/091814/analysis-should-you-get-gold-ira.asp.
Conclusion
Investing in gold can be quite profitable and a good way to diversify your investments. To do so, you need to follow laid down IRS codes in buying, storing and managing your investment. Gold IRA companies are available to help you to do this. However, ensure that you carry out thorough research and explore several options so that you can choose a reliable custodian.
