Let’s say that you want to diversify your retirement investment portfolio with some precious metals like silver or gold because there are a lot of benefits to doing that. Well, in this case, you should know the difference between gold IRAs and owning physical gold. A gold IRA is a special type of individual retirement account that contains gold. It’s worth noting that you can convert your traditional IRA to gold, convert IRA to Silver, or convert IRA to precious metals, in case you want to make this change.

Physical gold is exactly that and doesn’t require any type of account. Gold offers huge benefits when it comes to inflation and tax, it offers safety, control, and it’s a secure liquid investment that maintains its value even when the times are tough. In this article, we will talk about the main differences between physical gold and gold IRAs so you know what to choose when the time comes.

Who Should Start Investing in Gold IRA/Physical Gold

You Should Start Investing in a Gold IRA If;

·         You wish to enjoy the tax benefits of a gold IRA - It’s interesting to note that the contributions to your IRA can be deducted from your tax return. Also, if you have held your gold for at least a year and you haven’t yet reached 59 and a half years old, you won’t pay any taxes on the value growth;

·         You wish to diversify your portfolio - If you want to have a more diverse retirement portfolio, then investing in gold, silver, or any other type of precious metals IRA can be a great idea. When times get rough, regardless if we’re talking about the political or economical situation at a certain moment, your diverse portfolio will offer you stability and protection;

·         You want to keep your gold on long term and you accept paying fees for the security offered by an IRA -The fees will depend on the company that you will work with but in general, you will need to pay for an account setup, a yearly custodial fee, and certain depository fees;

·         You are sure that you can find a good custodian to help manage your IRA - You will need a custodian to help you with your gold IRA when it comes to administrative tasks and this custodian will also be in charge of the specific depository for your gold investments.

You Should Start Investing in Physical Gold If;

·         You want to have multiple choices regarding the certain types of gold you wish to invest in - This means that by investing in physical gold without an IRA account, you have the option to buy things like jewelry for example, and use them as investments. This offers more diversity and the option to buy and sell the gold more easily. Pieces of jewelry can also be left as an inheritance if that is what you wish to do.

·         You want to full control of your gold, whether you’re keeping it at home for ease of access or at a bank - One of the best things about investing in physical gold directly is that you have full control over your assets at all times. You can keep your investments at home or in a bank’s deposit box but this will not change the level of control that you will have. You will always be able to access your savings without any risk at all regardless if you want to give them to a family member, sell them, or buy more gold.

·         You want independence from the rules concerning the IRS-specific withdrawals and disbursements - Physical gold held on its own cannot be subjected to any penalties and it doesn’t have any withdrawal rules. For example, if you have a traditional IRA, if you want to make a withdrawal before the age of 59 and a half, you will have to include that withdrawal in your gross income and pay a 10% tax penalty.

·         You want to avoid gold IRA custodial fees - Last but not least, investing in physical gold will keep you safe from any custodial fees that you may otherwise have to pay if you held a gold IRA. You will not have to pay any maintenance fees, storage fees, or any other management-related fees.

Gold IRA VS Physical Gold (Pro/Cons)

The Pros of Having a Gold IRA

·         In a gold IRA, you can also include other assets such as different types of precious metals, cryptocurrencies, or even real estate. This is why this is such a good way of diversifying your retirement portfolio;

·         When it comes to taxes, there are also a lot of benefits of gold IRAs. For example, the IRA will not tax them at the capital gains rate of collectibles;

·         You will benefit from a custodian who will do all the management work for you;

·         The gold in your IRA will always be insured thanks to your custodian which means that this is a much better option than precious metal self-storage;

·         This is the best option if you are planning on holding your gold for a long time.

The Cons of Having a Gold IRA

·         You cannot keep collectible gold in your gold IRA, as per the request of the IRS;

·         You will have to pay the aforementioned fees that will mostly go to your custodian;

·         You will not have immediate access to your gold if a custodian is in charge of keeping it safe in a depository. So, in case of an emergency when you might need to make a quick withdrawal, this could be an issue;

·         The storage fees that you will pay to your custodian will be higher than if you were to keep the gold yourself;

·         Early withdrawals usually come with fees.

The Pros of Having Physical Gold

·         Physical gold can be stored wherever you want, even at home. This means that you can easily and quickly access it for emergencies;

·         You won’t have to pay as many fees for physical gold as for gold IRAs;

·         You can purchase gold in a lot of shapes and sizes such as jewelry, decorations, and accessories which also offers you a larger variety when it comes to pricing it;

·         You can also buy and sell your gold whenever you want and in any quantity without paying any fees or being restricted by certain sets of rules.

The Cons of Having Physical Gold

·         There is nobody to protect your gold investments apart from yourself so, in case something bad happens, you will be responsible for the damages and you cannot blame your custodian, bank, or anybody else;

·         Handling and shipping costs might still appear because you will need to work with professional dealers and customers, in case you want to sell your gold;

·         Profit from physical gold that is not held in an IRA needs to be taxed as capital gains and reported every year;

·         If you are planning to keep your gold for a longer time, a gold IRA has better benefits than physical gold held at home or in a safe.

Summary

All in all, physical gold has its advantages but the same can be said about gold IRAs. The secret here is to know what your plans are concerning your retirement investments and act accordingly. Hopefully, these pros and cons were enough to help you create an idea about what kind of gold investments suit you better.