5 Reasons why you should not compromise on your tile while rennovation
Precious Metals IRA
These times are hard and it may get even harder in the months and years to come. According to many economists, the global economy is expected to slow down this year and many economists fear a global recession may be on the cards. 2020 has just begun and we have already had a close shave with world war three and the corona virus outbreak is underway that has halted the entire economy of China.
The situation of the global economy is very volatile and this volatility is not good for investment. Ask any investor and they will tell you that stability is good for investment whereas uncertainty and volatility causes investment to lose its value. Investors hold their investment and wait for the turbulence to pass. This isn`t a hypothesis, this is a tested theory. The most recent example of this theory can be seen with the UK where the economy has been shrinking ever since the 2016 Brexit vote. While the economy is showing up with positive indicators such as lowest unemployment rate since the 70s but the economic growth remains dismal because the investors, at least till January were not willing to release their investment because of uncertainty over Brexit.
Now that the decision has been made, we should see investment increasing in the UK followed by increase in the economic growth. But here you have it, this is how closely investment and volatility are linked. Now if you are an investor and you are worried about the future, what are you going to do?
From the above example we can clearly see that investors or any sane person for that matter would first try to save their own investment from being eroded away. We have seen that when stock markets go into a free fall they end up wiping out billions of dollars of investment in a single session. Moreover when a full blown financial crisis hits, it takes down the whole economy.
The 2008 financial crisis wiped out at least 20% of the retirement funds, making people lose their life savings. Many who lost their life savings in the 2008 crisis are still working trying to make up for the loss they suffered.
So a prudent investor always invests with a contingency plan in mind. Precious metal IRA thus, is one of the best ways to secure your investment and prevent it from getting wiped out in the case of an economic crash.
What Is A Precious Metals IRA?
You must be well acquainted with a traditional IRA or the 401(K) account. It is an account many employers require their employees to have. Each month a portion of the employees pay goes into this account. Some employers also contribute an equivalent amount. You can choose to have a normal 401(K) where your pretax savings get deposited or you can opt for a Roth IRA where your post tax savings are deposited, or both. 401(K) accounts come with limited investment options, that is to say you can only invest your savings into very few options that carry a very low amount of risk. You cannot invest your 401(K) for example in real estate or precious metals.
Now since mostly you can invest in mutual funds or certificates, there is always a risk of loss in case of an economic crash. A precious metals IRA or Gold IRA serves to counter this risk of loss by securing your savings from any sort of loss of value.
Precious metals IRA is a self directed IRA account. It not only allows you to invest in options that are available to you with your 401(K) but they also allow you to invest in more options such as gold, silver, platinum and palladium.
How To Set Up A Precious Metals IRA
The process of setting up a Precious Metals IRA is a simple one. You simple have to seek a company that allows you to set up a precious metal self directed account. They are also called as Gold IRA, although the name says gold but it is a self directed IRA that allows you to invest in any sort of precious metal. Gold and Silver just happen to be the most common type of precious metals that people invest in. Platinum and Palladium are far more expensive than gold and silver.
Once you have found a suitable company you just have to get yourself registered and your self directed account should be set up in a couple of business days. You will also need to find a custodian. According to the IRS laws, investors cannot personally hold the precious metals bought through a Gold IRA. The precious metals have to be placed with an authorized custodian or a trustee. Banks, credit unions and brokerage houses can serve as custodians if they are authorized by IRS to act in this capacity.
Once you have chosen your custodian, you simply have to purchase your precious metals. Care must be taken here, you cannot purchase just any type of precious metal, it has to be in the form that is authorized.
The following points must be kept in mind while buying precious metals.
- Purity standards: Gold at 99.5% purity, silver at 99.9% purity, platinum and palladium at 99.95% purity.
- Bars, rounds and coins need to be produced by a manufacturer accredited from NYMEX, COMEX, NYSE/Liffe, LME, LBMA, LPPM, TOCOM, ISO 9000, or national government mint and should meet the minimum fineness requirements.
- Proof coins need to be encapsulated in original mint packaging with the certificate of authenticity.
- Non-proof (bullion) coins must be free from damage and in uncirculated condition.
Precious Metals Eligibility For A Precious Metals IRA
Precious metals bought following the points stated above should be eligible for your precious metals IRA. Your precious metals broker or seller will directly deliver them to your custodian and the price will be charged from your precious metals IRA.
In this simple manner you can set up your precious metals IRA and secure your investment and savings before the next recession hits. You can also liquidate your precious metals at any given time, thus allowing you to take advantage from high precious metal prices.