For a lot of people, investing in precious metals is seen as a very smart investment choice. There are so many advantages of having this investment that everyone considers it ideal.
So much is the allure of precious metals investments that people now add it to their Individual Retirement Accounts. Anyone who wants to get a precious metal IRA would have to find and work with a precious metal IRA Company.
While you can add 4 metals (platinum, palladium, silver, and gold) to your individual retirement account, people mostly prefer gold. Precious metals IRAs are otherwise called Gold IRAs.
Having a precious metal resource may look all rosy but it just may not perfectly fit your needs. You of all persons are more aware of your financial goals, dreams, and hopes. Therefore, you are the one to decide whether or not this investment plan is right for you or not.
To aid your decision-making, in this article, we will share some of the advantages and disadvantages of a gold investment retirement account.
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Pros of Gold IRA
The following are some of the major advantages of a gold investment retirement account:
1. Historically Gold has Always Maintained Its Value
Over time, gold has been known to maintain and even grow its value. Throughout history, people have trusted and appreciated gold’s value.
In recent times, this metal has even turned into a hot product in the market; this is obvious since its value only keeps becoming more.
As of 2000, an ounce of gold went for 279.29 dollars. In 2010, it had gone all the way to 1226.66 dollars. Towards the end of 2020, it was up to a staggering 2061.50 dollars per ounce.
So, when we say this commodity grows and maintains its value, we even feel like we are understating the truth.
2. US Dollar Has Become Weaker
It is no news that the United States dollar is among the world’s most sought-after and highly respected currencies. Check here to find out the highest currencies from across the globe. Despite this, the United States’ economic uncertainties have made the dollar weak, and it may even keep getting weaker.
Due to this value loss, investors are making changes to their investment patterns. Now, a lot of people are turning to gold. This has made gold’s value rise by almost 25% in the past year. So, getting a reputable precious metal IRA Company to invest with is a great way to leverage the current United States economic atmosphere.
3. It is An Hedge against Inflation
Inflation will always be an economic occurrence. Yet, historically, while stocks plunge and economic uncertainty is the day’s order, one commodity whose value keeps soaring is gold.
At the peak of inflation, fiat currencies’ strength is significantly reduced, and more notes are required for payments. But on the flip side, gold seems to love inflammation as it begins to thrive so well during inflationary periods. Therefore, if you want to save value when regular currencies are losing value, you will do well to turn to precious metals.
4. Gold’s Demand Keeps Increasing
Gold’s demand keeps increasing and it does not seem like it is about to decline. The high demand isn’t even limited to individuals as even countries like Russia and China have been stocking up this precious metal.
Cons of Gold IRA
The following are some of the major disadvantages of a gold investment retirement account:
1. A Small Chance of Fraud and Theft
Just like with owning any physical commodity, when you buy gold, there are the chances of fraud or theft albeit the chances are very slim. In reality, theft of your precious commodity may never even happen because storage facilities have top-notch security.
However, it is good to always consider everything even though it is very unlikely to happen. The custodian may decide to steal from their client although the chances of this happening are quite slim. Any custodian that attempts this would be easily apprehended and they know this so they would not dare to.
Therefore, while this is a (very slim) possibility, it is not one you should worry yourself over.
2. Additional Cost
If you choose a traditional IRA, chances are you won’t spend as much on them as you would on a precious metal IRA. Why? There are some additional expenses and fees that come with these special IRAs. You would be required to pay an annual custodian fee, storage fees, setup fees, and so on.
However, you can get a company that would waive the setup fee. Also, you can be on the lookout for companies with cheap storage fees. Also, look for flat rate custodian fees rather than fees on sliding scales. You can visit https://www.thefreedictionary.com/Sliding+scale+fees for a clear definition of the sliding scale. If you do not get a company with a flat rate custodian fee, the fee may end up eating into your profits.
3. No Interest Payments or Dividends
When you invest in physical precious metals, you do not get interest payments or dividends. The way you get profits on your investment is when its value increases due to certain economic happenings. If you do not understand this before you invest, then you may feel cheated out of interest payments and dividends of your investment.
In the end, the choice of whether to or not to invest in a valuable metal IRA Company is solely yours. However, if you properly consider all the pros and cons discussed in this article, your decision-making will be made a lot easier.