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Using a Self-Directed IRA to Invest in Precious Metals

July 14, 2020

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Self-Directed Individual Retirement Accounts (SDIRA) are becoming immensely popular nowadays. An SDIRA is a retirement savings account that can be a traditional or Roth IRA with the same contribution limits. But the notable tax benefits of an SDIRA are of one its differentiators from a regular IRA.

At the same time, the number of investment options also differentiates an SDIRA from a traditional IRA. An SDIRA allows you to invest in more assets than what an IRA allows. With an SDIRA, you can diversify your portfolio by investing in alternative assets, like real estate, precious metals, etc.

What is a Precious Metals IRA?

A Precious Metals IRA is simply SDIRA that gives you the opportunity to invest in certain types of precious metals such as physical Gold, Silver, Platinum, and Palladium. In this sense, you may also call it a Self-Directed Precious Metals IRA.

Why Use A Precious Metals IRA?

You must be aware of the fact that investment portfolios are prone to economic fluctuations. So, when you put your money in precious metals, it helps your portfolio to remain immune to the variations in the economy.

To guard your portfolio against such economic risks, you should diversify your retirement portfolio against cyclical recessions. And investing in precious metals is the right choice as they offer unique stability during volatile economic times in comparison to assets, like stocks and mutual funds.

How To Get Started With A Precious Metals IRA?

There is no complexity associated with getting started with a precious metals IRA, and it is a simple affair. Follow the following steps:

Step 1: Open the SDIRA

The first step of getting started is the need to considering how you will fund your account. You have two options. Either you can transfer an existing IRA or rollover a 401(k) from an old employer. Whichever option you choose to begin, you should start with an account value of at least $10,000, according to recommendations of experts.

Step 2: Choose from the Allowed Precious Metals

Next, choose the precious metals for which you are allowed to invest. It can be Gold, Silver, Platinum, or Palladium. At the same time, make sure that the precious metals in your account meet the level of purity, as stated by the IRS. Accordingly, Gold must be 99.5% pure, Silver must be 99.9% pure, and Platinum & palladium must both be 99.95% pure.

Step 3: Invest in Purchasing the Precious Metals You Choose

Subsequently, purchase the precious metals you choose.

Step 4: Choose a Depository for your Precious Metals’ Storage

After you make the purchase, the metals will be sent to a depository on your behalf. You, therefore, need to choose a depository to store your precious metals. Also, the precious metals you place in your IRA must be held in the custody of an IRS approved custodian until you reach the retirement age.

Benefits of a Self-Directed Precious Metals IRA

Now, acquaint yourself with the benefits of a Self-Directed Precious Metals IRA those are as the following:

#1: Diversification

You can spread your investments across various metals to safeguard your retirement savings.

#2: Security

As demand for the precious metals remains strong, investing in them helps you to insulate your retirement portfolio against economic fluctuations.

#3: Tax Advantages

You can enjoy the substantial tax-advantages, saving you money.

#4: Growth Potential

Demand for precious metals rises even during turbulent economic times. As such, the funds in your account will grow even at difficult times.

#5: Control

You can exercise more control over your account as you have the freedom to decide the necessary things by yourself. So, you are in command over the asset mix. You will be directing your IRA custodian over the important matters related to your account.

Conclusion

By investing in precious metals using a self-directed IRA, you can protect your retirement savings, diversify your investments, and secure your purchasing power. Precious metals are great investment choices as they attract demand consistently, the funds in your account substantial growth potential.