Gold IRAs provide a lot of advantages which make planning for retirement much easier and less stressful for the average account holder. A gold IRA to many is a ticket to a more diverse and stable investment portfolio. It goes without saying that many investments are risky. Nevertheless, the absurdly high demand for precious metals such as gold has contributed to the value of what can only be considered as one of the most stable assets in the history of mankind.
The Disadvantages of Investing in a Gold IRA
Yet, there are disadvantages to being an account holder on a gold IRA. What is perhaps one of the most striking realities about gold IRAs is that unlike socks and other types of investment, the metals which gold IRAs derive value from do not provide interest or dividends. To many, this is a huge disadvantage which threatens the potential gains one could make from improvements in the operational effectiveness and profits of companies.
There are several types of fees associated with gold IRAs. Owners of IRAs are typically subject to one-time initiation fees, annual custodian fees, and storage fees. These expenses can also be experienced with a traditional IRA, however. It is important to note that the fees may differ depending on the company which one chooses to get and maintain an IRA from.
Alternative methods may be used to include gold in one’s retirement plans. Gold ETFs can be used to buy and sell shares for holding in a conventional IRA. Experts recommend that investors do not exceed 10% in total portfolio holdings for alternative asset classes.
Stable Gold and Heavy Costs
In 1982 gold was worth $447.00. In today’s day and age, $447 can get one barely enough in the stock markets. Ironically, even individuals with thousands of dollars in the stock markets stand to lose money from such investments due to significant risks. While the growth of gold over the years has not been exponential as the likes of Bitcoin and unicron stocks, the fact remains that precious metals like gold and silver have been consistent as storages of value for cautiously optimistic investors.
Gold is heavy and so is the price of storing gold. Not only does storage location have to be accounted for but also the security and insurance of storage locations have to be accounted for. While gold IRA holders do not personally have to deal with storage of gold, there are fees associated with ownership of gold IRAs that stem from storage related costs. Administration and storage fees can easily cost hundreds of dollars per year.
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