What’s driving your investment decisions?
What’s driving your investment decisions? iStock

Planning for your retirement requires having a long-view of your portfolio. Ideally, you should begin planning for retirement as soon as you start working. The compounding effects of investing over the long haul are massive. Investing in non-volatile assets such as gold and silver, will give your portfolio the stability and endurance it needs to protect you throughout your investment horizon. Gold and silver IRAs are key components of such a strategy. Here’s how to invest in them to build wealth for your retirement.

What is an IRA?

An individual retirement account (IRA) is an investment account set up with a financial institution that allows you to save for your retirement on a tax-free or tax-deferred basis. In a traditional IRA, investments are made into financial instruments. Experts believe you will need as much as 85% of your pre-retirement when you are retired. Investing allows you to achieve this.

A gold or precious metals IRA differs from a traditional IRA in that rather than investing in financial instruments, a gold or precious metals IRA invests in physical gold or a precious metal such as silver. The physical gold or silver is held in custody on behalf of the IRA account owner. Most precious metals IRAs are self-directed IRAs, which allow the account owner to have a more diverse portfolio than is possible with other IRAs.

IRAs are allowed to possess one or all of the following precious metals: gold, silver, platinum and palladium., so long as they are in the form of IRA approved bullion or coins. The Internal Revenue Code specifies how approved precious metals must be stored. Some trustees own their own storage facilities, whereas others use third-party storage facilities.

Gold is the most common type of precious metals IRA, so typically, we speak of “gold IRAs”, even when we mean “precious metals IRAs”.

Why Are Gold IRAs Important?

Gold is a safe haven against inflation. This matters now more than ever as the world enters a period of stagflation (stagnant economic activity and high inflation). In addition, it’s important to diversify your portfolio so that in periods of downward volatility, you have an asset that counteracts that downward volatility. Gold has a low correlation to equities, so typically, when stocks go down, gold goes up.

Where Can You Get a Gold or Silver IRA?

A growing number of companies are offering gold IRAs. You can find some of the best gold IRA companies, and pick one that you trust to invest in. You open a self-directed gold IRA account with them, and then transfer funds into that account to purchase gold, silver or some other IRA-approved precious metal.

You can roll over any existing IRA to your self-directed IRA. This will not affect your tax-free or tax-deferred status as your funds will still be within a qualified retirement plan.

Another option is to make yearly contributions following the defined contribution limits. Once you have funded your account, you can start by physical gold and other precious metals. It’s that easy.