How to Diversify With a Gold IRA to Protect Your Retirement

When it comes to investing advice, few concepts are more ubiquitous than diversification. More colloquially, this means that you should avoid putting all of your eggs in one basket. For example, investors in Tesla have done quite well over the past several years. However, those who invested in Enron found that past performance may not be indicative of future results when their stock became worthless overnight.

Retirement Savings

The lack of retirement savings that many Americans have accumulated is one of the biggest fears of economic experts. Many American retirees currently rely on Social Security for at least 90% of their retirement income. This will not provide for a comfortable retirement for most. Additionally, there is widespread fear that Social Security payments will drop in coming decades unless Congress acts to shore up its funding mechanism. This will mean that those retirees who rely on Social Security in the future will have to live on fewer dollars unless they have other assets for retirement.

401(k) Accounts

In recent years, many large corporations have gone away from traditional pensions that guaranteed a monthly annuity payment in favor of newer 401(k) plans. Many employees have access to these retirement vehicles. They allow future retirees to save money in a tax-advantaged account. Those who save religiously will likely wind up better off in retirement than their grandparents who had a pension. Unfortunately, saving in these accounts is not mandatory, and many employees live from paycheck to paycheck.

However, those who are able to save in a 401(k) frequently receive a matching contribution from their employers. Some companies will match each dollar contributed with another dollar for an instant 100% return. This is a return that's hard to beat. Most company 401(k) plans offer a range of mutual funds that invest in stocks and bonds. Some will come with unreasonable fees; others will have very low management fees.

One big question arises when employees leave an employer. What happens to their 401(k) plans? Some employers allow their employees to leave their money alone until retirement. Others will request that their employees find somewhere to place their funds.

IRAs

If you’ve ever wondered, “what does ira stand for?” It stands for individual retirement accounts and is an option for those who want to save money outside of a 401(k). These people might not want to save in a workplace retirement fund because of poor options. Others might not have access to a work-based retirement plan. IRAs are more flexible than 401(k) plans and other workplace options. They are a vehicle for investments, and you can access many more asset classes by using an IRA. You can hold precious metals in an IRA. Additionally, it's possible to invest in real estate through IRAs. Most 401(k) plans provide access to stocks and bonds. Therefore it's a good idea to use an IRA to diversify into different asset classes.

Rollovers

Those who have 401(k) investments from previous employers can roll their funds over into IRAs. If you make a direct rollover, there is no need to pay any taxes or penalties at the time you roll the investments into an IRA. Once your investments are in an IRA, you have more control over them. You can sell stocks and bonds and diversify your investments. You can liquidate the investments in your old account and complete a gold IRA rollover. This will allow you to access the precious metals market.

Is It Safe?

Investing a part of your retirement savings in precious metals can be quite safe. While you will likely want to maintain diversification through some holdings in stocks and bonds, precious metals like gold can help you toward your goals. Most investments are volatile. When stocks go down, gold and other precious metals tend to maintain their value. At times, they will even increase in value. This can protect many of your hard-earned investment gains for your golden years. Additionally, gold can tend to provide a hedge against currency fluctuations. Should the dollar decline in value rapidly because of higher inflation, gold will tend to increase in value to keep up with the inflation. This can help you maintain the purchasing power of your investments. Therefore, an investment in gold or other precious metals can be an important part of a solid retirement investment strategy.

Taking advantage of retirement accounts on your own is a key to experiencing a comfortable retirement. You'll want to diversify your investments, and rolling some of your funds into a gold IRA can be a smart move.