Choosing the right gold IRA companies can be a huge step you may take to protect your investment. You need to choose a knowledgeable and honest gold IRA company. After all, gold IRAs can be appealing, especially if you want to have a diversified retirement portfolio. All that you need is to find a custodian for your IRA with an approved depository.
After doing this, you can decide to purchase the approved gold and transfer it to the depository in the right way for the custodial company to account for it. This article explains the key factors to consider before choosing a gold IRA company.
Understand how gold IRAs work
No doubt, after the 2008 financial crisis and the resulting Great Recession, gold IRAs have increasingly become more popular. There have been record gold sales and the launch of many gold IRA companies that can handle and even simplify transactions have ensured that investing in gold IRAs is appealing.
Therefore, if you decide to invest in gold using a retirement account, then you need to find a self-directed IRA. This is because IRA accounts can be the only way you can buy hard assets like real estate, precious metals, businesses, and many more. Legally, an IRA account needs to have what is known as a custodian which can be a bank or any other institution that can keep records of your account, report to the IRS concerning it, and handle disbursements.
To fund this gold IRA, there are two options. It means you can choose a rollover or transfer funds from your IRA, 403b, 401k, and 457b account or you may decide to contribute directly to your account.
When the IRA is funded, you can choose any of the precious metals you want to purchase and instruct your custodian to buy utilizing your account. The custodian can recommend a suitable storage facility where you may store your purchases. You can technically withdraw funds from the IRA at any time, though you may owe a 10% penalty if you do it before you reach 59.5 years old.
Key things you need to consider when choosing a gold IRA company
There’s no getting around it, you need to have an IRA. If the company you are working for doesn’t provide any type of retirement savings plan, then an IRA can be your main retirement savings resource. But even if your employer matches 410(k), an IRA can be a good vehicle that you can utilize for retirement savings. But you need to open your IRA with a lender or bank that you feel comfortable with. Below is what you should look for before opening an IRA:
Choose a company you trust
Once you decide to open an IRA, your options are going to be mutual fund companies, banks, brokerage firms, or insurance companies. Each of these options come with their advantages and disadvantages, and long-term implications. If you are looking for a steady income, then it’s a good idea to get an IRA with an annuity, and you can find this option with an insurance company.
On the other hand, if you decide to have investment flexibility, you may want to find a brokerage firm. Remember that a brokerage account can provide a lot of investments that may be sold without sales charges or commission.
Consider how you prefer investing your money
It’s also a good idea to decide if you want to purchase ETFs or mutual funds. Also, there is a chance that you may want to pay another person to create an investment plan on your behalf. However, if you simply want investments that don’t have commissions or fees, then you should choose a brokerage account.
Decide whether you will prefer a certificate of deposit
There are many banks out there that provide IRAs and they usually promote certificates of deposits (CDs). The benefit of a certificate of deposit is that they can be safe. The major disadvantage is that it may not offer a good return on investment. When you invest in the market, you can get at least 6% return and a certificate of deposit can only give you a 1% return.
Most of the choices have to do with the risks of tolerance and the time you are going to retire. If you want to retire in 30 years, then you need to be aggressive. But if you decide to retire in five years, it’s a good idea to play it safe.
Figure out if prefer annuities
If you want annuities, then it makes sense to consider an insurance company-based IRA. Keep in mind that annuities are usually not recommended for IRAs. This is because a huge benefit of annuities is your money can be tax-deferred, so an IRA can already be the case. But an annuity usually gives a guaranteed income, making it suitable for people who are close to retirement.
You need to consider a lender that provides a free meeting
As a benefit, there are some lenders on the market that encourage their customers to meet their financial advisors at no extra cost. However, you need to be careful with these companies. This is because some of these financial advisors can push for specific stocks or products. On the other hand, other lenders can give you genuine and helpful financial advice.
Take note of fund and management fees
Opening an account doesn’t mean it’s always free. However, some companies tend to charge higher fees than others, and there are various things that they can charge you. Besides transfer fees, you can expect advisor fees, trading fees, and fund management fees, depending on what you decide to invest in.
Thankfully, you can avoid most of these fees as long as you research properly the account and investments as well as paying attention to all the fine prints. You should not hesitate to ask a gold IRA company questions while opening an account.