Investing
Many Americans today are looking at ways to try to protect their wealth. More and more people are becoming afraid of the possibility of recession, as recession often brings with it the threat of financial losses. With the memory of 2008 still fresh in many people’s minds, the last thing anyone wants today is to see a repeat of those dark days.
That’s why more and more Americans are looking to alternative investments as a way to help protect their wealth. They’re uneasy about stocks, bonds, and conventional financial investments, which didn’t do well last year and could do even worse if the economy falls into a recession.
Many people are looking to precious metals to help protect their wealth, as the history of precious metals as safe havens and hedges against inflation is looking awfully important right now. One precious metals investment product that is gaining in popularity is a silver IRA. If you’ve never heard of a silver IRA, read on to find out more.
A silver IRA is really just an individual retirement account (IRA) that invests in physical silver coins or bars. Unlike most IRA accounts, which hold financial assets such as stocks, bonds, and shares in funds, a silver IRA owns and holds physical silver. These tangible assets are managed by an IRA custodian and stored at a bullion depository.
Owning silver brings with it many potential benefits. Here are three of the most important ones.
When most people think of a safe haven asset, they think of something like gold. Silver always seems to get short shrift. But many people who are in the know understand that silver can sometimes be a better choice than gold, or at least a complementary choice to gold.
Silver can outperform gold during times of economic turmoil, as in the aftermath of the 2008 financial crisis when gold nearly tripled in price but silver more than quintupled. That potential for greater growth is always there.
Just remember that when gold reached its previous all-time highs in 2011, silver was twice as expensive as it is today. That means silver has a lot of catching up to do and is comparatively undervalued today. But if demand picks up if the economy falls into recession, the silver price could skyrocket.
Even at today’s comparatively low prices, silver has still provided great growth to investors over the years. Since 2001, silver’s annualized rate of growth has been 7.83% per year, versus 5.37% for the Dow Jones Industrial Average and 5.12% for the S&P 500.
Silver, like gold, also has a reputation for being a hedge against inflation. That’s because it, like gold, was a prominent monetary metal. In fact, silver was the primary monetary metal that most people would have seen and used. Older Americans may still remember the days when they paid for groceries with Walking Liberty and Franklin half dollars, silver Washington quarters, and Mercury dimes.
Even though silver isn’t used in everyday commerce anymore, it still maintains its purchasing power over the long run. During periods of high inflation it can help protect against inflation too. During the 1970s stagflation, for instance, silver’s annualized rate of growth was over 30% per year. If silver were to repeat that kind of performance today if inflation became entrenched, the silver price could shoot through the roof.
Finally, silver can add another layer of diversification to your portfolio. So many people think that investing in a mix of stocks, bonds, and fund shares is enough diversification. But very often they’re overexposed in one sector, or in one type of asset. And in a year like last year, when both stocks and bonds lost money, conventional asset allocation may not protect you.
Diversification isn’t necessarily going to make you more money, but it can help you reduce your risk profile and help minimize losses. While you may read about diversifying your portfolio with gold, it’s less common to read about diversification with silver. But silver can also help diversify your precious metals holdings as well as your overall portfolio.
In addition to the benefits of owning silver, a silver IRA offers unique advantages. Here are two that are particularly important.
A silver IRA offers tax-free growth, just like any other IRA, 401(k), or other tax-advantaged retirement account. This means that the gains your silver makes aren’t taxed until you decide to take a distribution.
If your silver IRA is a Traditional IRA, your distributions are taxed when you take them. If your silver IRA is a Roth IRA, your distributions aren’t taxed at all.
Because of the tax advantages it offers, a silver IRA can help protect your retirement savings. If you have assets in an IRA, 401(k), TSP, 403(b), or similar retirement account, you may be wondering how you can protect them against loss.
Many people may think their only option is to cash out their retirement assets, take a tax hit or potential penalties, and just hold cash. Others may think their only option is to ride things out and take whatever losses come their way. But there’s another way.
With a silver IRA you can roll over or transfer assets from your existing retirement accounts into a silver IRA tax-free. This allows you to minimize your exposure to financial market losses and position yourself to take advantage of the potential for silver’s price growth.
Like any other retirement account, a silver IRA is subject to IRS rules and regulations. There are a couple of them that are particularly important for silver IRAs.
By law, no IRA is allowed to invest in collectibles. The tax code states that any coin or metal is automatically considered a collectible, with a couple of exceptions. Gold and Silver American Eagle coins are specifically exempted from consideration as collectibles, as well as any coin or bullion meeting the minimum fineness requirements for futures contracts.
What this means is that any silver coin or bar with a minimum fineness of .999 (99.9% pure silver) is not considered to be a collectible. Mints and refineries around the world are aware of this requirement, and they produce coins and bars specifically to meet these requirements.
Most of the popular investment-grade silver coins on the market today are produced to this standard, as are most investment-grade silver bars. Goldco offers a wide variety of these IRA-eligible coins from mints around the world, working directly with mints to bring you these coins.
If you’ve been doing research on precious metals IRAs, you’ve probably come across something referred to as a home storage IRA. This purports to be an IRA arrangement in which your IRA can purchase precious metals like silver and store them at home. If this sounds too good to be true, it’s because it is.
Coins and bullion owned by an IRA are required to be in the physical possession of a trustee, defined as a bank or other person who demonstrates to the Secretary of the Treasury their ability to administer the assets of the trust. While it’s theoretically possible for an individual person to meet those requirements (which are quite involved), no one has ever done it.
Individuals who have tried to start home storage IRAs for themselves have been found to violate the laws and regulations surrounding IRA assets, and have had to pay large amounts of taxes and fines. While a home storage IRA may sound like a great idea at first, it could cost you dearly.
If you start a silver IRA, you need to recognize that your assets will be managed by a custodian and stored at a depository. All IRA assets are managed by custodians, but not all of them manage precious metals assets like gold and silver. Goldco works with established custodians who have experience managing precious metals to ensure that your silver assets are professionally managed.
Your silver coins and bars will be stored at a bullion depository. Goldco works with established bullion depositories to make sure that your silver IRA assets remain safe and secure.
Just like any other IRA account, a silver IRA, if it’s a Traditional IRA, is subject to required minimum distributions (RMDs). This means that at age 73 you’ll be required to start taking RMDs from your silver IRA. You can choose to take distributions either in cash or in physical metals.
If you have retirement savings that you’re looking to protect, maybe it’s time to start thinking about a silver IRA. Learning about how silver can help protect your savings and investments can go a long way toward helping you secure your financial future. Don’t leave any stone unturned in your quest to protect your wealth in the face of an oncoming recession.
Thousands of people have already taken advantage of the benefits offered by a silver IRA, hoping both to stay ahead of the curve if a recession occurs and benefit from silver’s potential price growth. They’ve taken the opportunity to protect themselves and their hard-earned wealth while they can, before markets and the economy suffer a downturn.
2008 still looms large in many people’s minds, but it wasn’t necessarily a one-off occurrence. The next recession could very well be worse than 2008, and could cause millions to suffer significant losses. In a worst-case scenario we could even face a stagflationary crisis like the 1970s, with years of subpar economic growth. Preparing for those potential scenarios requires analyzing the risks ahead of time and preparing for them so that you don’t get caught unprepared.
Silver can be one way to help protect your wealth in the face of recession, inflation, and economic turmoil, and owning silver through a silver IRA can be a useful tool in harnessing silver to work for you. The precious metals experts at Goldco have helped thousands of people just like you benefit from holding silver in their portfolios.
With over $1 billion in precious metals placements and thousands of satisfied customers, Goldco has become one of the most trusted names in the industry. Give us a call today to learn more about how you can benefit from a silver IRA.
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