As you grow older, you might start to wonder what exactly you can do with all of the money that you have saved. But before that, it would be a good idea to protect its value from any adverse economic change.
There are many ways to do this, but the most direct strategy that you could use is setting up a precious metals IRA. With one, you can have the ability to own precious metals to your name and in bulk. But that does beg the question: how do you set up one and which company should you do business with it? To answer those, it is best to look at some of the basics of IRAs and the companies that deal with them.
Top 4 Precious Metals IRA companies at a Glance
As an IRA company, Augusta is quite known for having one of the highest investment minimums in the industry. To do business with them, you should be able to come up with $50,000.00 in your savings accounts.
However, Augusta is still considered one of the better options for IRA companies in the market for one good reason: they are quite transparent with how much everything is going to cost you. This family-owned company will provide you with a rather detailed breakdown of expenses in the first meeting. On paper, this should help you prepare the right amount to do business with the company for years on end.
It also helps that the company offers a money-back guarantee in case you are not finding their services to be acceptable, as well as a buyer protection policy for first-time IRA owners. Lastly, the company offers a buyback option with no liquidation fees for anyone wanting to withdraw their gold from their IRAs.
That being said, the selection in the company is strictly limited to gold and silver coins and bullion. If you want to purchase some platinum and palladium, you might want to look somewhere else.
Transparency with fees
Strong focus on gold and silver
A+ rating from the BBB
Lack of options for palladium and platinum
$50K investment minimum
Like any other company, American Hartford Gold offers the usual features such as a sizeable product library at reasonable prices, as well as some services to make the most out of your precious metals IRA. However, where they stand out the most is the way they deliver one of the best customer service experiences in the industry.
What the company does with their clients is make sure that all of their needs are attended to at every step of whatever transaction they are going through. The company also has an always-available customer support line so clients can get a hold of any agent and have whatever issue they are facing be addressed properly.
The company also excels with its investor education program. With access to a library of content, a client is expected to learn all that they can about whatever precious metal they are to invest in before they make their decision final.
To top things off, the company employs a variable fee structure. This way, how much you pay for their services every year will be directly proportional to how much you used your IRA for that particular period. They also have one of the lower investment minimums in the industry today at $10,000.00.
That being said, not everything is ideal with AHG. Their transactions can take between 3 days to a full week to get processed. Also, they do not support shipping to depositories outside of the United States.
Always available customer support
$10K investment minimum
Focus on investor education
Longer waiting times for transactions
No online price listing
No shipping option outside of the US
Transparency with fees is a standard for any precious metals IRA company. Birch Gold takes things a bit further by ensuring that all the information you need is provided to you way before you even make a call.
Unlike other IRA companies, Birch Gold breaks down your expenses with them on one page on their website and in a format that is easy to access and understand. Of course, the figures may change, but the company is known to announce any changes in their fees months before implementing them.
The company is also known for implementing a flat rate structure for its fees. However, this is both an advantage and disadvantage depending on your situation. If you are buying in bulk and frequently from the company, then you can maximize your annual fees for storage, shipping, and other transaction-related costs. However, if you use your IRA infrequently and buy small amounts whenever you do, the flat rate might be inconvenient for you.
Aside from this, Birch Gold is noted for having one of the slowest transaction processing rates in the market. If you are quite unlucky, you could wait for 2 weeks to a full month before any order you made gets cleared for shipping.
What this simply means is that Birch Gold might be ideal for newcomers so as long as they have the resources, patience, and the buying frequency to capitalize on the flat rate fee structure.
Multiple options for custodians and depository services
Transparent fee structure
Strong focus on palladium and platinum
Flat rate is ideal for frequent bulk buyers
Notoriously long transaction waiting times
Flat rate is not ideal for infrequent buyers
Investors tend to do better with their choices if they can learn everything that they could possibly have to know about their options before making a decision. This is where Goldco stands out the most as they are known in the market for their extensive investor education program.
How this works is rather simple: when somebody becomes an IRA holder with Goldco, the company will give them access to an entire library of free content that they could use however they want. This library will include articles, blog posts, videos, and webinars that cover a wide array of investment and precious metals-related topics. Aside from that, their website has some tools that you can use such as a real-time market monitor and other analytical features.
Aside from that, the company employs what is called a “white-glove” level of customer service. In practice, this means that a specialist or agent is assigned to every client whenever they make a transaction. With this company representative, the client should get the guidance and assistance they need to complete any transaction successfully. They also offer complementary services such as 401k rollovers and a buyback option.
Despite these advantages, Goldco is also known for not being that direct when it comes to disclosing fees. Sure, they will provide you with a detailed breakdown of your yearly expenses with them, but you have to ask them first over the phone. They also have the second-highest investment minimum ever recorded in the industry at $25, 000.00.
Investor education services
Short transaction waiting times
White-glove-level customer service
Lack of complete transparency when it comes to fees and charges
$25K investment minimum
What is a Precious Metals IRA?
Before anything else, you must understand that Individual Retirement Accounts are not the only way for you to protect your savings once you reach the retirement age. They are merely one of several strategies that you can use to make the most of your retirement money.
A precious metals IRA functions as a standard IRA in the sense that it is a separate and independent entity from you that can buy, store, and own assets on your behalf. But where standard IRAs focus on paper assets like stocks, bonds, and titles, this IRA is designed to also store elements like gold, silver, palladium, and platinum.
However, don’t take things too literally when it comes to these IRAs. The gold you will buy is going to be stored in an authorized depository facility while the account book is being managed by a custodian, which is also authorized by law.
This would also mean that IRAs are one of the most-regulated retirement plans in the country right now. The IRS would like to make sure that you and every other IRA holder won’t use the account for some tax-related abuse like evasion.
The complexity of how IRAs are set up and managed would also mean that having one can be expensive for you in the long run. Depending on the case, you can expect to spend as much as $300.00 for your IRA every year, transaction-specific charges not included.
Because IRAs are a source of privileges and obligations, you have to ask yourself this question before you decide to set up: Is an IRA the right fit for me?
Advantages of a Precious Metals IRA?
There are quite a lot of benefits to be had from having a precious metals IRA. However, they all boil down to 5 distinct advantages, which are the following.
Precious Metal IRAs Allows for Diversification of Assets
Any seasoned financial adviser will tell you that diversifying your assets will still be your topmost priority as you retire. This means that your investments should contain a diverse set of asset types and forms. With a precious metal-based IRA, you can introduce assets like palladium, gold, silver, and platinum in the form of coins, bullion, and bars.
These precious metal products have their own market value and other inherent qualities. Depending on the IRA Company that you choose to do business with, you can own products coming from different mints across the world. Some modern IRAs allow for the storage of digital assets like Bitcoin and other crypto-currencies.
What this tells you is that your precious metals IRA can be the storage area of a diverse pool of assets. You might want to consult with your financial advisor first before you make a purchase to keep your assets as diverse as possible.
Beyond Diversity, Precious Metal IRAs Provide Opportunity
Is your precious metal retirement account only meant for precious metals? The answer is no. If you get hold of a creative custodian, the company that will invest in assets for you, your IRA can provide you with multiple investment opportunities coming from different asset types.
For instance, you can invest in companies that mine for precious metals by buying any stock that they issue on the local exchange. At the same time, a portion of your gold can be traded for bonds either from private companies or the government itself. Unlike stocks, a bond is a contract which means that whoever issued it to you will have to pay you back no matter what after a given period has passed.
Being open to these alternative investment opportunities is crucial as it introduces income generation to your retirement account. And what makes it even better is that the income your IRA could earn will either be tax-deferred or tax-exempt from the IRS. The former means you can pay your tax obligations from them at a later date. The latter means that you don’t have to pay taxes for them at all. What privilege you are given depends greatly on what the IRS thinks is more fitting for your situation.
Precious Metal IRAs Provide Safety
It goes without saying that recent world events have shown everybody that nothing is guaranteed today, especially market performance. Due to the sudden inflation and the now 2-year-old pandemic, even the strongest-performing markets before 2020 are struggling.
This can be concerning since fiat currencies like the dollar are quite dependent on the health of the market. If the market goes down, then their spending power diminishes as well. This is where precious metals have an edge against paper assets as they maintain a high value due to their inherent quality and high multi-sector demand. To put it simply, gold and silver will remain valuable because they have a lot of strong qualities and everybody else needs them for something.
With a portion of your wealth put into these assets, you introduce a buffer or hedge of sorts for your money as a protection against inflation.
Precious Metal IRAs Offer a Level of Control Absent in Other Retirement Solutions
There is actually little control afforded to you when it comes to typical investments and retirement plans. Everything is fixed from the amount deducted from your salary and the monthly pension. All that you have to do is to come by the bank every month and collect your check. That’s not exactly a dynamic way to make use of your savings.
But with a precious metals IRA, you are given full agency over what to do with it. If you want to focus on a particular metal, then you can do so. If you want to use your IRA to store highly rare coins, then nobody can stop you. And if you want to withdraw some of your assets to sell, then the company handling your IRA can assist you on that matter.
That does not mean that your IRA is completely free from interference, however. You still have to abide by the rules set by the government, especially the IRS. But so as long as you keep your IRA activities within legal boundaries, your IRA is fully yours to do as you please.
What Precious Metals Can You Invest in For Retirement?
A precious metals IRA is designed to store precious metal commodities specifically gold, platinum, silver, and palladium. As for the form that these metals can take, you may use your IRA to store coins, bars, and other forms of bullion.
Way back then, it used to be that your options are limited to American sources. That means US-made bars and coins like the American Eagle and the Gold Buffalo. That all changed in 1997 when the IRS relaxed its restrictions on internationally-minted coins and bars.
Today, any IRA holder can get to own coins and bars from Canada, Germany, Australia, China, the UK, and Germany. The only caveat here is that these products must meet IRS standards before you can purchase them.
The one factor that the state would look for is purity, which means that the product you are attempting to buy must be comprised mostly of the metal that they were advertised as at the very least. For gold, that purity standard is 99.95%. As for the rest, the purity is at 99.99%.
Of course, the IRS would rather that you deal with legitimate precious metals. The government is always on the lookout for counterfeit coins and bars, but the problem is not going away anytime soon. You can do your part by making sure that you source your metals from completely legitimate and certified dealers.
How Much of the IRA Must Include Precious Metals?
Although your precious metals IRA was designed to store gold, silver, palladium, and platinum, experts would recommend that you don’t use all of it for such assets. At best, your IRA should be comprised of precious metals between 5% and 10%. Why such a low recommended percentage? There are three reasons.
First, the best assurance of financial security under any economic condition remains to be asset diversification. As you retire, you should not focus solely on one type of asset as this might be disastrous in the long term. If the sectors where such assets were in high demand fail, the entire value of your wealth could go down.
Next, precious metals can maintain high intrinsic values but are downright terrible when it comes to income generation. You cannot expect to earn passive income from them so long as they are in your IRA. After all, the purpose that they were there in the first place is to secure your wealth. If you want your wealth to earn a little money on the side regularly, you should look into assets that can generate income like stocks and bonds.
Lastly, the notion that precious metals are failure-proof is nothing but a myth. No commodity is that invulnerable. It is just that precious metals have yet to suffer massive price drops. That does not mean that they will continue to appreciate it in the future.
Thus, your IRA should be as diversified as possible. This is the only way that you can cast a safety net wide enough to protect your wealth from severe economic downturns.
How to Open a Precious Metals IRA
A precious metals IRA is seemingly in a class of its own as far as complexity is concerned. Each IRA Company has its own distinct setup processes and they will guide you through each step to ensure success. Whatever the case, there are some steps that you can expect regardless of who you do business with.
Select a Self-Directed IRA Custodian
A custodian is a company authorized to handle the IRA for you. They can be a bank, a trusted company, or a similar financial institution. They can do a lot of things for clients but a bulk of their work revolves around investing funds found in the IRA for all sorts of assets, precious metals included.
The IRA company of your choice has its own preferences for custodians but they can work with whatever you have in mind, as well. As for which custodian you should choose, the rule of thumb is to pick the one that meets your budget and needs the most. Also, since these custodians will do the investing for you, you might want to pick a company that is trustworthy enough to handle money.
Choose a Precious Metal Dealer
A dealer is a person who receives the money from your custodian to sell precious metals to your account. So, what should you look for in a dealer? You might have to do some research on this.
You have to understand that only certified dealers can operate in the USA. This means that you should look for if they are affiliated or partnered with industry associations. That would include groups like the Professional Numismatists Guild and the Industry Council for Tangible Assets.
Of course, the IRA company can recommend some dealers for you. Think of it this way: a legitimate IRA company will always only do business with equally legitimate dealers and custodians.
Decide What Products to Buy
This part is rather straightforward. Your dealer will provide you with a copy of a catalog of their available products. All that you have to do at this point is to choose which products you are most interested in.
So, what should you choose? Assuming that you are new to IRA investments, it would be best to pick something that you are most familiar with like Gold Eagles, Canadian Maple Leaf coins, and Gold Buffalos.
Once you have gotten used to buying precious metals, you might want to branch out to riskier stuff like rare coins or platinum/palladium bars. At the same time, you might want to pay attention to what your dealer is telling you as to which products are the most viable purchases now.
Choose a Depository
For as long as your precious metals IRA exists, all the metals attached to it will be stored at an authorized depository facility of your choosing. There are three depository services to choose from right now: Brinks, the International Depository Service, and the Delaware Depository Service.
As for your choice, you should base it on convenience. The best one for you should have a facility closest to where you are (for buybacks and withdrawals) and has fees that meet your budget. Also, you might have to pick what storage option you want for your assets. Most facilities offer non-segregated storage but you might be better off with fully segregated vault storage.
Complete the Transaction
With your dealer, custodian, and depository facility chosen, and your products picked out, all that is left to do is to complete the buying process. Depending on your company, your orders can be cleared for shipping within a day to a week at best.
Much of the work of handling the shipping and updating the account logs fall under the duty of your custodian and depository service. What you have to do at that point is to constantly monitor the value of your purchases. You will never know when you will need to sell them later.
How Do You Make a Withdrawal from a Precious Metal IRA?
There are two ways for you to make a withdrawal. The first option is called an In-Kind Withdrawal. This is quite simple as all that happens is that a portion of the gold you requested for withdrawal will be taken out of your precious metals IRA, and then shipped to your address to do with as you please.
The second option is called a Buyback. Here, the IRA Company or depository facility will make an offer to buy a portion of your gold. The selling price will never be the amount that you initially purchased them but it is almost always closest to the current market value of the products.
In both options, you have to be mindful of the guidelines set by the IRS. For instance, you must meet certain requirements before you are allowed to make a withdrawal. Also, you are required to make minimal annual distributions for every piece stored in your account once you reach 72 years. Furthermore, there are penalties imposed if you do not have that gold disposed of within two months.
Final Thought - Precious Metals IRA
There is no doubt that there are quite a lot of benefits to enjoy from a precious metals IRA. At the same time, it can be the source of a lot of obligations that can adversely impact your finances in the long term. This is why you should pick the right IRA company to do business with.
In that regard, the best possible option for you right now would be Augusta Precious Metals. Their combination of fairness in the fees, reasonable pricing for the products, and an ability to give the information that you need to make a good investment choice mean that the company is more than capable of helping you attain your investment goals while doing business with them.