By Molly Gavin
Anyone looking to diversify their retirement portfolio should consider an IRA backed by physical gold and silver.
Some Mistakes to Avoid when investing in precious metal IRAs:
– Making purchases without consulting your tax specialist. Although more people think this is a simple transaction, it can be pretty complex and costly if done incorrectly or irresponsibly.
– Not properly diversifying across the four precious metals: gold, silver, platinum, and palladium. A poor allocation mix could lead to an unbalanced portfolio that is not adequately diversified.
– Not understanding all the fees that are associated with a precious metal IRA account. Many people think they will only be charged an enrollment fee, but there are other types of fees to consider before deciding on your investment.
– Purchasing gold or silver coins, bars, rounds, etc., from online dealers without checking their authenticity first. One of the downsides to purchasing these items is that you cannot prevent them for authenticity before purchase – something vital when investing in precious metals.
– Not understanding the rules and regulations of your precious metal IRA account, including tax consequences. To avoid any nasty surprises with your investment, you must fully understand all aspects of these accounts before deciding to invest in them.
– Placing your account in a safe deposit box. This is not advisable as the IRS rules state that you should be able to ‘inspect’ your precious metal IRA investment regularly – something difficult to do if placed inside a safety deposit box.
– Investing for longer than five years. To get maximum tax benefits from a precious metal IRA, you must invest for a minimum of five years. If your investment term is less than this, the IRS will assume that you have liquidated at least 50% of those assets and taxed accordingly.
– Not keeping records. It is imperative to keep track of all transactions relating to your precious metal IRA investments – not just the purchases you make. This means filing any withdrawals, contributions, and distributions that may occur in your account with the IRS, as well as exchanging or selling precious metals within an IRA (if applicable).
– Not understanding what type of asset allocation is right for you. For example, precious metal IRAs are subject to different rules regarding investing than traditional IRAs.
In conclusion, you must understand all the rules and regulations around investing in a precious metal IRA before taking action. This will ensure your financial security and save money on costly mistakes throughout your time as an investor.
