A gold backed IRA is an IRA that is based upon gold, as opposed to being based upon stocks, bonds, mutual funds or assets. Learn now if a gold backed IRA is right for you.
Differences between Gold Backed IRAs and Traditional IRAs
The main difference between gold backed IRAs and IRAs that are based upon paper assets is that the account holder must actually buy the physical gold, and have a trustee keep the gold for the account holder. This costs the account holder a custodian fee of $100 TO $200 a year. These IRAs are not as complex as IRAs with stock portfolios because the account holder does not have the same amount of decisions with gold-backed IRAs as they would in a stock portfolio IRA.
Advantages to Investing in Gold
Gold may be an excellent investment because it is solid and can weather the vagaries of a volatile stock market. If there is any mass panic or uncertainty in the stock market, gold is a sound investment because it will always be in demand. In contrast, investing in dollars may mean that the investment is susceptible to inflation, and investing in stocks may result in a rapid loss of value to the IRA. Gold investments generally rise when there is a recession in which the stock market crashes or if the dollar is weak. A gold backed IRA is a good investment to hedge against inflation and maintain the value of your money over time.
One thing to keep in mind is that a gold backed IRA may not have the same growth potential as a stock-based IRA. This is because the price of gold is relatively stable. However, even with the downsides, investing in gold is safe and relatively easy to do for those even with minimal knowledge in the area.