The current unpredictable and unstable nature of the economy has investors looking for more secure options for their money. As a result, more and more investors are looking into gold investments as a safe alternative to traditional investment portfolios. To make things easier, you may be able to use your existing retirement account, like a Roth IRA, to make this investment.
What is a Roth IRA?
A Roth IRA is a retirement account that is a bit different than a traditional IRA. The primary difference is that contributions to a Roth account are tax free and can be withdrawn completely at retirement after the age of 70.5. However, not everyone qualifies for a Roth IRA: for an individual, the adjustment gross income must be below $107,000; AGI for a joint account must be under $169,000.
There is an investment cap of $5,500 per year for Roth IRAs. In addition, not all plans allow for a wide range of investment opportunities. As a result, investing in gold can be complicated.
How Can I Invest in Gold Using my Roth IRA?
There are several ways to use your Roth IRA to invest in gold. One popular method is through the purchase of Exchange Traded Funds (ETFs), which can represent either physical gold or stocks in a gold mining company. For investors who wish to invest in ETFs relating to physical gold, there are two options: SPDR Gold Trust and iShares Gold Trust. Both options are traded openly on the stock market.
It needs to be noted that investing in ETFs does not give you the same advantages associated with owning physical gold. Investors who want to take full advantage of their gold investments and are worried about a systematic collapse should steer investments toward actual physical gold. Such investors can rollover their Roth IRA into a gold-backed IRA. There are many more options available through a gold-backed IRA as opposed to a Roth IRA.
What Types of Gold can be Held in a Roth IRA?
There are two types of gold that can be held in a Roth IRA, gold backed mutual funds and gold backed exchange traded funds. Investors are not allowed to hold physical gold in a Roth. This regulation can be circumvented by buying a fund that represents physical gold, such as GLD or IAU. To own physical gold, an investor can rollover an existing account or create a self-directed IRA. Regardless of the type of investment plan, only investment grade gold (not collectible gold) can be purchased and used in an IRA. Investment grade gold requires purity of 99.5% and above.
Investing in gold can be a great way to solidify your investment portfolio and safeguard your future. Many retirement accounts allow for the purchase of gold as long as purity standards are maintained. The first step is to check with you plan to find out whether or not you can purchase gold. If not, there are several options available to you. Regardless of how you do it, investing in gold is a great first step to achieving the future you deserve.