If you currently have an IRA or 401K with one mutual asset you are putting yourself at risk of losing everything. All financial experts say that diversification of your funds is the best way to protect yourself. We’ve all heard the saying that you should not put all the eggs in one basket and that definitely rings true when it comes to a 401K or an IRA.
Putting all of the eggs in the same basket is very risky because if that basket fails then you are left with nothing.
401K plans can be very risky and vulnerable because they invest in different stocks. Stock investments are extremely risky because if a company were to go bankrupt you could never see that money again.
A great way to diversify your accounts and lower the vulnerability of your account is by investing in gold and adding it to your plan through a 401K rollover.
How Does Gold Compare vs. the U.S. Dollar?
The US financial system is based on confidence, confidence that foreign investors will continue to pour money into US dollar assets. Gold and the US dollar were once tied together but their ties were cut during the Civil War for what was supposed to be a temporary time.
Once the cut was permanent a new relationship between currency and commodity appeared and the value of the dollar began to fluctuate while the value of gold remained stable. As the value of the dollar decreased the value of gold increased.
The cash flow of the government will never be insufficient for internal debt because it can create as much money as it needs to deal with that debt but the more money they create the less valuable the dollar becomes. The value of the dollar today is completely derived from money printing done by the Federal Reserve System, also known as the Fed.
Today, it is worth 5% of the value of a dollar in the early 20th century. Gold value will only change based on investors’ confidence. If the confidence is lost then the system collapses because the perceived value has decreased.
There is a very small amount of Gold in the world compared to the amount of dollars mainly because gold has to be mined while the government can make dollars at their whim. Gold has been thought to be a poor retirement investment for many years but only because of lack of education.
When measured in dollars it is a poor investment but look anywhere else globally and it is a great investment. The primary reason to own gold as an investment is because it is not held and controlled by banks or the government but by you.
Advantages of Investing In Gold
People make investments for all kinds of different reasons. Some have a detailed investment strategy while others may do research to make the best decisions. Either way there are a lot of advantages to investing in Gold:
Protection against economic downturns: Whenever the economy is down one of the actions most likely to take place is the government printing more currency driving the value of the dollar lower.
Gold value does not change much: Gold value does not fluctuate as much as the dollar does and is a more common form of currency globally so you can always expect to be able to find a buyer.
Diversification of portfolio: Stocks and shares decline when there is an economic downturn. With a good balance of gold in your portfolio you can relax knowing you’re protected.
Demand of gold: Gold cannot be created. It must be mined which is why the demand is so high. Although it may fluctuate in the short-term, long-term trends are on the rise.
Ease of purchase: There’s a wide range of online and physical gold dealers that buy and sell them in coins and bullions.
Disadvantages of Investing In Gold
Although there are plenty of advantages to investing in gold there can also be some disadvantages:
Can be pricier: More costs are involved at the time of buying/selling gold.
No financing possibilities: You must pay the entire price of the gold upfront with cash at the time of purchase.
There is no tax advantage: Whatever you decide to do with your gold you will always have to pay taxes on it and there are no opportunities for you to use your gold reserves as a tax deduction.
Gold is subject to confiscation: At any moment the government can go to a warehouse and confiscate all their gold. If this were to happen you would lose all of your investment and there would be nothing that you can do about it. This rarely happens though. A quick and easy solution to this is to store your gold somewhere safe like a bank deposit box. With the elections knocking at the door, there can be change in policies and rules. The recent presidential debate between Hillary Clinton and Donald Trump proved that the economic ideas of both the candidates are quiet different. However Fisher Investments views on the Presidential Debate that there is very little scope of any significant economic impact.
More expensive to get: Because gold is mined rather than made it is more expensive to get and develop into coins or bullions.
Impurity level: In the past when you bought gold the gold you received may not have been the level of purity that they claimed lessening the value of your gold. This problem has almost been completely resolved today due to hallmarking tests.There is no income. While other investments like rental properties can provide additional income gold does not.
Questions You Must Ask All Gold IRA Companies
Some people who are uninformed about their investment options get preyed on by gold companies. Don’t fall victim by knowing the right questions to ask.
Firstly the company should be a member of the Better Business Bureau. If they are find out what their current rating is and if any complaints have been filed against them.Do they have an investment package that you can read before making any real decisions? Are there any upfront/ongoing costs? If so, what are they? Is physical gold the only thing you can invest in? The answer should be no. If it is yes they are not a good place to invest your gold. Am I only limited to one IRA investment?
The answer should be no and if it isn’t do not invest with that company.Determine their knowledge by asking them to explain the difference between a transfer and a rollover. Where is their gold stored? If in a vault is that vault fully insured? Is the gold held in your name or the company’s name? You should always get gold stored in your name to avoid any complications should they arise. Do they allow you to store physical gold in your home? At what rate will they buyback your gold? Do they buy it back at market rates and are there any additional charges to selling to them? You should look for companies with a fixed fee and those with introductory offers. What is the best gold for your IRA? Some companies have a limited type of coin they use and not every type of gold coin is a good long-term investment so do your research.
How long will it take to setup your gold IRA and to deliver the gold?
If you are investing $1000s with a company you should expect first-class service and delivery of your gold in days not weeks or months.What are the initial IRA setup and storage fees?
When working with gold IRA specialists they should always be courteous and professional. If they are trying to push a specific coin on you find a different one. You should never feel taken advantage of and can rest assured that with companies like Regal Assets that will never happen.
How to Put Gold in your 401K
One way to put gold in your 401K is by discussing rolling over your 401K with your employer. You will want to rollover your 401K into a self-directed IRA because this will give you complete control of your account and your investments, although it does mean having to handle your own filing and paperwork and for gold IRAs you must have an IRA custodian which can become quite expensive.
If you’ve made the decision to add gold to your 401K then follow these 3 simple steps and you will be ready to start:
Step 1. See if your employer will allow you to rollover the funds from your 401K to an IRA account. If they can then that makes everything simple however, if they are not in a position to facilitate that then your other option is to cash-out your 401K and use those funds to start your gold IRA but be prepared to get a 10% penalty charge for withdrawing your money before your 401K has matured if you under the age of 59 ½.
Step 2. You need to transfer your money to your new IRA custodian who you should have already picked before cashing out or rolling over your account.
Step 3. Once your gold IRA account is funded you will need to decide which gold items you want to invest in. With some gold IRAs you can only invest in specific gold coins. You can contact your IRA custodian for tips and advice on the best coins to invest in.
Choosing the right gold firm will help you protect assets from economic uncertainties and keep you up-to-date with the status of your account, putting you at ease.
Pros of Rolling Over Your 401K/IRA into Gold
Gold does not lose its value no matter what state the economy is in. There will always be buyers looking for gold globally. Although you don’t have to pay taxes on your 401K plan until you make a withdrawal taxes on gold are significantly lower because the IRS views gold as a collectible item.
401K plans are risky when just investing in stocks because stock prices can vary from extremely high to extremely low and if a company goes bankrupt you will most likely not get your investment back.
Cons of Rolling Over your 401K/IRA into Gold
If you fund your gold IRA with funds that were disbursed to you then you will be required to pay 10% on it from the IRA. If it is a gold IRA rollover then there are no tax implications.It is more stressful than dealing with a traditional IRA or 401K. You will have to have a self-directed IRA account which means doing all your paperwork and filing and you will need a gold custodian which means more expenses for you.
There are a lot of misconceptions about moving your savings from a 401K to a gold IRA. There are also many investors who are misinformed about investing in gold and gold IRAs. Many people are too nervous to try it because of the current state of the economy as well as the rise in mistrust in the government.
If you’re hesitant about rolling over your 401K or IRA into gold because of uncertainty a good option is to buy physical gold and store it in a safe deposit box. You will always have access to it and can rest assured that it will not be affected by things like government currency changes and stock crashes.
While rolling over your 401K is not a particularly difficult or complex task you should not risk your retirement and the possibility of getting penalties on your account because you did not get assistance from an expert. Companies like Regal Assets are a great find for all your 401K/IRA needs and pride themselves on their customer service and skills.
In short, investing in gold is a great way to secure your wealth. With a self-directed IRA it is even easier to customize what investments you want, how you want to withdraw your money and beneficiary designations.