Why You Should Not Hold Gold In An Ira
Gold has become an increasingly popular investment vehicle for investors. There are many investment options for individuals who are looking to hold gold and many different account types where gold can be held. Many people hold a significant portion of their assets in individual retirement accounts (IRAs) which allow them to defer taxes until their retirement date when amounts are distributed from these accounts. This provides a large tax advantage and allows individuals to invest pre-tax dollars that allow them to hold higher amounts of assets.
While it is possible to hold gold IRA, it may not be the wisest decision to do so. Given that most financial advisors recommend individuals have diversified portfolios that consist of equities, bonds, precious metals such as gold and silver, and real estate, there are certain tax advantages of holding other assets in an IRA other than gold. Since there are maximum contribution limits associated with IRA accounts, it may be wise to allocate other investments to your IRA accounts and to hold go outside of your IRA account. This article will focus on the reasons why this may be the case, though situations will vary from individual to individual.
Since you do not pay taxes on dividends and capital gains on investments in your IRAs it is a good idea to allocate those investments that have the highest tax bill associated with them to your IRA. Since many dividends and long-term capital gains are taxed at preferential qualified rates of 15% it is more appropriate to keep investments that pay these amounts outside of your IRAs and keep higher taxed investments such as corporate bonds and real estate investment trusts (REITs) in your IRA. Investors in gold primarily keep two types of gold investment types in IRAs; stock in gold mining companies and gold etfs. Since these qualify for lower tax rates it is better to allocate these gold investments to taxable accounts and keep other higher taxed investments in your IRA. If you want to find out other information, click for source. Check out http://www.ira-to-gold.com/ and get more tips on how to get the best out of IRAs.
While stocks in gold mining companies and gold etfs provide you with some exposure to gold there are many restrictions with these investment types. Gold mining companies are not perfectly correlated to gold prices due to specific company risk and gold etfs have management fees and other expenses allocated to them. The purest investment in gold is by owning gold bullion or gold coins, though there is storage costs associated with these gold investment options as well. Since you cannot own gold bullion or coins in your IRA account it is often best to hold gold outside of an IRA account and allocate other investments to your IRA account.