Recent times have seen volatile markets. Inflation has caused the value of money peak and drop unexpectedly. While IRAs are great for tax reasons, they do not in any way protect the funds deposited in them. If inflation is high the value of your IRA drops and it is low then your IRA is a nice little nest egg. That is why financial experts now recommend that you invest some portion of your IRA (at least 10%) in precious metals like gold and silver. Precious metals, historically, have tended to retain their value despite the volatility of the market. Like any other investment, there are benefits and risks of precious metal IRAs.
We have already mentioned the first benefit which is diversification of investment. A lot of people who lost their money in the last financial crisis did so because they held it stocks, bonds and other forms of paper currency. When the market crashed these investments crashed as well and had a devastating effect on peoples IRAs. There were those who were not affected however at least not very much. These are people who had invested in precious metals backed IRAs. The price of precious metals remained stable over that period meaning their investment was secure. Precious metal in IRAs ensure that your retirement fund is protected to a certain degree from market instability.
Another important benefit is the returns that you get on precious metals which are almost always more significant than returns on paper investment. If you invest in silver, gold, platinum or palladium and you sell later you will get more than if you just let your contributions sit in your IRA. You will also be happy to note that these investments tend to gain value faster than other investments.
People buy precious metal IRAs for another reason they can never lose total value. Throughout history, silver and gold have always maintained high value at least higher than regular currency. You can be assured that although their value may fall youre the precious metals in your IRA are always worth something significant.
So now that we know the benefits, what are the risks?
All investment vehicles carry a degree of risk and precious metal IRAs are no different. They come with several risks:
The first is the risk of being ripped off. Precious metal backed IRA is relatively new and the government is looking for ways to properly regulate it. In the meantime, unscrupulous parties take advantage and people do get ripped off for one primary reason you dont hold the precious metals in your hands, they are stored in designated storage. The party that you approach to buy the precious metals for you may not and because you dont ever get to see the metals, you will only find out that you were ripped off when you go to sell them. Since it is such a great idea to invest your IRA in precious metals it is important that you dont shy away for this reason. You should approach your bank they will guide you through the process with a vetted professional.
The other risk is that precious metal prices are volatile. True, they are not much affected by market conditions but they move up and down very fast. Prices can be high today and low tomorrow. This means that you never really know when to invest or when to sell. In addition to that gold and silver tend to suffer from prolonged downswings. If you are almost retired and this happens then there is a chance that it could affect your ability to start withdrawing funds.
Precious metal IRAs are a great way to ensure that your retirement nest egg remains secured to a certain degree. You are investing some of your money in metals that dont ordinarily lose value. That said, you need to be able to get the proper guidance when making this investment. It is still new and governmental oversight is not quite in place. You should make sure that you use a renown professional who is either recommended by your bank or any other financial institution that you work with. If you do it right you will not lose any money.