An IRA is an individual retirement account; this is an account where people save up a portion of their monthly salary for their retirement. Over time the funds in this account accumulate into life time savings. The savings in this account can and ideally should be invested into profitable investment options such as stocks, mutual funds, target dated bonds etc. Traditional IRAs are also known as 401(K) in the USA. The 401(K) account is named after the section of the tax code where it is named. Many employers demand their employees to set up their 401(K) accounts so that a portion from their monthly salary can be deposited into their accounts. Many employers also contribute a pre determined amount or match the employee’s contribution too.
401(K) accounts come with limited investment options because the whole rationale behind the 401(K) account is to save up money for the retirement and invest it to create passive income. For this reason fund managers do not allow 401(K) account holders to invest their savings into high risk investments such as real estate. However, precious metals such as gold and silver are also not allowed to be invested in. Not because precious metals are risky investment but because they do not carry any periodic rate of return.
This inability to invest the savings into precious metals exposes the 401(K) accounts to a very evident and inevitable risk of loss. Investment in shares and other options can suffer from losses in case of an economic crash or in case the business the account holders have invested in fails.
What Is A Gold IRA?
For this reason, many investors turn to Gold IRAs, but don’t know what is a gold IRA. Gold IRAs are self directed individual retirement accounts that allow investors a wide array of options to invest in and most importantly these self directed accounts allow individual investors to invest tin precious metals which they would not be able to do with their 401(K) accounts.
Once you have decided to invest in a Gold IRA, you must then decide if you are going to transfer your current savings or set up an entirely new Gold IRA. Most people transfer their savings because salaried individuals generally do not have a very high savings ratio.
Look For A Gold IRA Company
Before you set up your Gold IRA, you must first search for a suitable gold IRA company. There are many companies in the market that offer good rates and services but since you will be trusting this company with your retirement savings, it is only prudent to carry out due diligence before investing your savings.
The best way to go on about is to ask friends and family members, if someone else in your social circle has a Gold IRA, they may be the best person to talk to. They can guide you through their personal experience. Alternatively you can look up Gold IRA companies and check their ratings and testimonials.
Rating agencies such as Trust Pilot and Better Business Bureau are good rating agencies and many Gold IRA companies proudly display their ratings. Be sure to check the rating of your preferred company directly from the rating agency website. Go through user testimonials to learn more about the quality of service and any potential drawbacks.
You can also call in to the company of your choice and inquire directly. Be sure to check if the company you are interested in has got a dedicated legal and technical department to deal with rollovers or not. Although the transfer or rollover from 401(K) is fairly easy but it still involves some degree of technical work and your Gold IRA company must have the legal and technical expertise to carry out this process in a seamless manner.
Once you have chosen the Gold IRA company of your choice, you can proceed to the next step and set up your self-directed IRA. Doing this should not require more than a couple of business days. This process will usually require a quick phone interview by your IRA company to get your credentials and other necessary data. You may have to visit their office to sign some paper work and this should be it. Your Gold IRA company will give you your account number and other details once your account is approved and set up.
Choose AGold IRA Custodian
Next up, before you start buying gold you will need to choose a custodian. Under IRS laws, precious metals bought through self directed IRAs cannot be held in person. Gold or silver bought in this manner has to be kept with a custodian or trustee. There are many who provide this service, according to law a custodian must be authorized by the government. Banks, credit unions and brokerage houses act as custodians. So once again, take your time to search for the custodian you can trust. Custodians charge storage and safekeeping fees. A good point to keep in mind is that if what they are offering is too good to be true, then you should steer clear.
Some custodians have got a single depository and this means that you will not be able to have access to your gold at all times. Custodians can arrange visits but this is to cumbersome for most people. Some custodians have multiple storage points or depositories, making it easier to access the gold on request.
Purchase The Gold Bullion
Once you have decided your custodian, the next step is to purchase gold from your savings. Once again this step requires due diligence. There are many brokers and gold sellers in the market, do not fall for those who sell you gold at the lowest rate. Authentic gold brokers will usually be close to the official rate offered. Those who offer discounts that do not make sense are usually scams and they speculate on the price by taking a few days to deliver your gold. Some scam brokers take up to 9-14 days to deliver your gold. Beware of such sellers because they use the time duration to speculate on the gold price and make a profit. Authentic brokers and sellers should not take more than a couple of days to deliver your gold to your custodian.
In this manner you can set up your Gold IRA and secure your savings and investment.