According to a recent report by Vanguard, one of the biggest and best-known investment companies in the world, the next 10 years should see a slowdown in global markets growth.
This should come as no great surprise given the fact that current market valuations already seem elevated at these levels and interest rates are still low, historically.
In other words, investors should invest conservatively and expect conservative returns.
Investing in precious metals
For many people, 10 years of investing conservatively may be a tough pill to swallow. However, if Vanguard’s outlook is even slightly accurate, taking on added risk may potentially result in increasing the volatility without the elevated returns you would come to expect from the increased risk.
In such market environments, investors should consider investing in precious metals as a way of investing in a historically stable asset that will also help shield your returns from the effects of inflation. Better yet, investing in precious metals for your IRA lets you enjoy tax-deferred or tax-exempt benefits that will further help protect your gains.
While precious metals IRA have the goals of letting you grow your investments on a tax-deferred or tax-exempt basis there are some key differences to keep in mind.
Here’s what you should know before investing in a Gold or Silver IRA.
Specialized Accounts
According to https://www.valuewalk.com/2019/10/lear-capital-company-profile-reviews/ unlike traditional IRA accounts that hold paper assets for stock, bonds and/or cash equivalents, precious metals IRA actually hold physical gold, silver, platinum or palladium in the form of bullion coins or bar products. Because most people recognize Gold and Silver names these accounts are generally called Gold or Silver IRA accounts.
The fact that these precious metals IRA accounts hold actual coins and/or metals means that they incur significantly higher storage costs and base fees vs the traditional paper holders.
Self-directed IRA accounts
According to Value Walk, most people are not educated stock pickers. They prefer to let the pros manage the positions and names of the investments they hold in their IRA’s via managed accounts or single-fund options.
That’s not to say that IRA account holders don’t have the option of selecting the size and makeup of their portfolios if they feel up to the task. For these guys, a self-directed IRA allows them to choose which investments to manage,
In addition, a Self-Directed IRA offer investors the option of investing in alternative asset classes such as annuities, CDs, and yes, precious metals.
Your capital gains are your only returns
One of the biggest benefits of investing in a tax-deferred or exempt vehicle like an IRA is that your gains compound at a faster rate than a taxable vehicle. The dividends and interest you receive from traditional investments are key to this strategy.
With precious metals, however, you do not get dividend or interest payments so your only form of return is through the capitals gains offered by the potential rise in these precious metal prices.
While investing in precious metals may not be the silver bullet (had to say it!) everyone looks for in a slow-growth market, it can certainly be a solid way to diversify your IRA investments and protect your gains.