If you think that your retirement nest deserves some sparkle, you might be thinking about adding precious metals to it. The value of these assets has been high in both good and bad economic times. They are mined in small amounts each year, which is a primary reason why they’re so valuable. As the supply is not large enough to meet the demand, their prices will likely grow in the future.
Another benefit of investing in precious metals is that they are not directly linked with fiat currencies, so they are often regarded as a safe bet against inflation (more on other methods of inflation protection read here). Plus, these assets provide income and diversification. And the best thing about precious metals is that they are highly liquid. You can turn them into cash anytime.
How to Invest in Precious Metals
Investing in precious metals in physical form may be the purest form of investment. But it’s not always easy to store them properly and authenticate them. As a result, some investors prefer ETFs, futures, or other investment products. They have no contact with these assets, just yield profit. But it’s fairly lower than when you invest in physical gold, silver, or any other precious metal.
The IRS permits you to invest in precious metals as tangible assets, but it’s not as simple as walking into the jewelry and buying a gold ring. You need a specialized retirement plan – a self-directed IRA. It’s an account backed up with precious metals in physical form or some paper assets related to mining or utilizing gold, silver, platinum, etc. But you must know which products are allowed to be held in your IRA.
You should understand that a precious metal IRA requires you to keep your assets in a depository. Your custodian will complete any transaction on your behalf. Plus, they will manage the transfer of your assets and all required paperwork and tax reports.
Your contributions and gains will be without any taxation while they are in your account. After withdrawing your funds, you can pay penalties if you do that too early (before 59 1/2) or taxes on distributions after retirement.
If you decide to invest in gold with your precious metal IRA, you must know the rules. It allows you to invest only in specific products, as long as they meet the IRS’ minimum fineness standards. These can be bars, bullions, and rounds, but only those with 99.5% purity.
Another requirement is that these products should be produced only by entities or manufacturers accredited by the government mint. As described on https://www.metal-res.com/gold-ira/precious-metals-allowed-in-an-ira/, you have to buy them only from reputable dealers and always ask for a certificate of authenticity.
Bullions and bars must be of specific weight and great conditions. It means you can’t trade with damaged or worn-out gold products. IRS seems to be quite strict with these requirements, but for a good reason. This selectivity will ensure that the gold products will keep their long-term value better.
Just like gold, silver will be a valuable asset in years to come. It has great potential as a raw material in all sorts of industries, determining the high demand for this metal. So it’s an excellent option for long-term investing with precious metal IRA, especially since silver is affordable and very profitable.
Silver can be processed in different products suitable for investments. But just like gold, the IRS only allows a selection of a few bullions, rounds, and bars made of silver. The purity of silver goods must be .999, regardless of the type. They must be marked by an approved refiner.
Platinum and Palladium
While most investors are familiar with gold and silver, two more precious metals provide great potential for investors. The IRS allows platinum and palladium products as investment vehicles, following the same rules for gold and silver – purity, weight, and condition must be according to standards.
These metals have strict purity standards in an IRA – 99.95%. So you can buy a bar or coin with a fineness of 0.9995 or higher. If you’re not familiar with these terms, it’s best to consult a financial advisor or broker before you invest. Make sure you buy platinum and palladium goods only at certified brokers.
Even stricter rules apply to silver, gold, and platinum coins if you want them in your precious metal IRA. You can have both proof and non-proof coins as a part of your retirement funds, as long as they meet IRS requirements. Besides purity and weight specifications, these products must be in excellent condition and preserved in original mint packaging. The year of issue is not of great importance.
Just in case, avoid any collectible or commemorative coins, regardless of their purity. The gold coin your grandpa received as a thank you note for participating in war can’t be part of your IRA. But any coin issued by NYMEX or COMEX-approved refineries will do. American Eagle and American Buffalo are certain, so as Canadian Maple Leaf, Austrian Philharmonic, and Australian Kangaroo coins.
Due to all those IRS-ordered rules, it’s not easy to invest in precious metals on your own. But when you have experts by your side and someone familiar with these requirements, diversifying your portfolio with these alternative assets is way easier. You can be sure everything is done by law, so you can yield profit and be relaxed about your financial future.