Buying gold with IRA funds might seem daunting, but it couldn't be easier. That is if you have the right people in your corner. Depending on your employer, you might not be able to buy gold with a 401k, but you can buy gold with IRA. Companies like ours help you break down the process so you can purchase gold IRA confidently and understandably. Learn how to diversify your retirement investments to cover you in case the unexpected happens. Read on to find out all about buying gold with IRA.
Employer-Sponsored 401k Plans
We mentioned 401k accounts above, so let's discuss those briefly. For most people, whether or not they choose to go with an IRA (individual retirement account) or 401k, it all depends on what their employer offers. Not all employers provide 401k reports. Even if yours does, it might not be to your liking. You're not obligated to take what your company offers you. You can always open your own IRA outside of your employer. You can even have a 401k and an IRA if you want. Many people choose this option.
On the topic of 401ks, not everybody knows that you can still open a 401k if you work for yourself. You can't have a 401k without a job, but you can open a self-employed 401k if you're self-employed. This may not function exactly like a traditional 401k offered through an employer, but the basic idea is the same.
We're here to talk about gold. The good news is that you can always buy gold with IRA and often purchase gold with 401k. If your heart is set on investing in gold (a good idea), we'll find a way to make it happen for you.
Buy Gold with IRA vs. Buy Gold with 401k
Discuss with your plan's administrator if you want to invest in gold or other precious metals with your company's 401k. Not every 401k program will let you invest in precious metals. Typically, the tighter the project is locked down, the less freedom you have with your investment.
You can invest in various assets if your 401k offers a brokerage option. 401ks don't allow you to invest directly in gold, but you can more or less do the same thing through other means, such as purchasing stock in gold industry firms. ETFs, or exchange-traded funds, offer another way to buy gold with 401k without directly purchasing gold.
Let's take a little detour here to talk about exchange-traded funds.
Exchange Traded Funds (ETF)
An easy way to get a basic understanding of ETFs is to think of them as investment bundles. Rather than buying stocks individually, you're pooling them into one pile and other commodities, assets, or bonds in which you may want to invest. In the context of this article, ETFs offer a way to invest in gold without buying it directly.
The value of this bundle then rises and falls with the value of the things contained within. Many people consider this a more secure form of trading because you can hedge your bets by pooling traditionally safe investments with riskier ones. Additionally, ETFs come with fewer broker commissions than if you were to buy the contained stocks individually.
In many ways, ETFs are like mutual funds. However, unlike mutual funds, ETFs are purchased and sold on the stock exchange (hence the name exchange-traded funds). While mutual funds trade only once a day after the market closes, the share prices of ETFs fluctuate all day.
Exchange-traded funds have become increasingly popular over the years, with the amount invested in them increasing by trillions over the last two decades.
Buying Gold with IRA
If you don't have a 401k plan or choose to go with an IRA for whatever reason, that's where we come in. When buying gold with IRA funds, you have a couple of options. Like a 401k plan, you can invest in gold industry firms or exchange-traded funds. Again, though you won't buy gold directly, you'll still be tying your investing directly to the price of gold. As the cost of gold increases, so will your investments. In many ways, it's no different than now buying precious metal.
However, many will point out that you're still not purchasing gold. For some, there's a lot of comfort in knowing that you possess real gold, whether coins, bullion, or some other form factor. Fortunately, you can purchase physical gold (or silver, platinum, etc.) with a self-directed gold IRA.
Remember, though you will own actual pieces of gold, they'll be stored in an IRA-approved depository. You cannot take physical possession of your gold until you close the account, which presumably isn't happening until you retire. You must be at least 59 and a half years of age before withdrawing your metals or liquidating them for cash without any tax penalty.
If you're looking to store your gold yourself, no investment options allow you to do so. Of course, you could argue that gold is an investment in itself, but keeping it at home instead of through an IRA or 401k limits your investment opportunities in a significant way.
Buy Gold IRA to Diversify
You don't need to be a financial advisor to know that you shouldn't put all your eggs in one basket. Diversification is essential, especially when it comes to investing. Depending on who you talk to, you'll likely get different advice on how much of your retirement should be in gold. Some say no more than 10% of your portfolio should be gold. Others say no more than a third. As we said, different advisors will give you further advice. The best thing you can do is hear them out and decide what you feel comfortable doing.
All investors agree that having some gold in your portfolio is a good idea because it safeguards against inflation. Gold has an inverse relationship with the dollar. As the value of the dollar drops, the value of gold rises—the more market uncertainty there is, especially when there is high inflation, the more in-demand gold becomes. For example, gold hit a record high during the COVID-19 pandemic. It increased dramatically once again in 2022 during the Russia-Ukraine conflict.
People feel comfortable with the time-tested, tangible value of gold. It will always be used in jewelry, electronics, aerospace, and more. Plus, as technology grows and improves exponentially, the demand for gold will only grow. As with all things, the value might ebb and flow, but gold will always be a safe bet.
Nothing is Guaranteed
Of course, investing in gold isn't a sure thing. While gold tends to outperform stocks and bonds in the long run, stocks and bonds can increase in price much faster. And, like everything else, it's susceptible to the forces of supply and demand. The more gold there is, the less valuable it is.
Gold is still mined all over the world. Advances in mining technology can increase the efficiency of existing mines and open up others previously inaccessible for one reason or another. That's not even mentioning gold extraction. As extraction methods improve, gold can be taken from low-grade ore more efficiently. All of these developments can have significant effects on its value. Keep all of this in mind whether you buy gold with a 401k or through an IRA.
We Have you Covered
While it's essential to understand what's happening with your investments, don't worry too much. We've got your back when buying gold with IRA funds. We'll work with you to choose suitable investments and explain everything. We know this stuff is complicated. If it were simple, there wouldn't be professionals like us.
Grab our free 2023 Gold IRA Kit now to learn how to protect your retirement and maximize your investments so you can retire comfortably and in security. Our free guide comes in multiple formats to watch, read, or listen to. Once you request your free kit, it should appear in your mailbox shortly. After you review our guide, reach out to us, and we'll have you buying gold with IRA funds in no time. There's no time like the present to secure your future.