What is a Self Directed IRA?
A self-directed IRA is a type of retirement account where the account holder makes the investment decisions, specifically where to invest and how much.
The biggest difference from a conventional IRA is in who makes the calls: with an SDIRA, you have much more control of your investment decisions.
Along with this greater amount of control, a self-directed IRA also provides flexibility with your investments. You are not restricted to the most common of assets — such as stocks, bonds, mutual funds, and CDs.
Your self-directed IRA enables you to also invest in the following (and more):
- Precious metals, including gold
- Real estate
- Debt
- Businesses
- Cryptocurrencies
As you can see, a self-directed IRA takes your ability to diversify your retirement savings to a whole new level.
You may already know this: diversifying your investments is widely known to be a smart strategy. If this is news to you, let’s quickly review why.
Why Diversify?
There is an old proverb (from Spanish or Italian origins): “Don’t put all your eggs in one basket.” No matter the context, this phrase means don’t risk losing everything by only having one plan or idea and then depending on that one thing entirely for your success.
This is particularly true when it comes to saving for retirement.
Leverage a safe-haven approach.
According to Forbes, “buying metals represents a safe-haven approach to diversification.” These additional investment “baskets” provide diversity and act as a shield against an unpredictable stock market, the fluctuations in the value of the U.S. dollar, and other economic uncertainties.
Gold can be used to diversify several categories of investments, including equities, bonds, and cash, like the U.S. dollar.
Gold’s performance endures when the dollar doesn’t.
Time and time again, gold’s performance has been demonstrated to correlate inversely with that of equities, bonds, and cash. When the value of the dollar or a bond goes down, the value of gold tends to increase. Because of this, diversifying a portfolio by investing a portion of it into precious metals such as gold can help round out a portfolio’s value over time.
The fact that gold is a tangible item of value—as opposed to a printed promise of value—adds another layer of diversification and security to your portfolio. People may lose faith in stocks or in the dollar, leaving you holding a piece of paper with no value. Since precious metals have tangible worth and have historically carried intrinsic value, they’re effectively guaranteed to have lasting value.
Precious metals retain value.
Historically, gold, silver, and other precious metals tend to hold their value in the face of inflation. If your retirement includes precious metals, this can provide some peace of mind that your current lifestyle could be preserved and without having to continue working long past your target retirement date.
If you need more convincing, take a look at some statistics demonstrating the endurance and consistency of precious metals.
From 2007 to 2009, the U.S. stock market faced one of its worst crashes ever, dealing a massive blow to as much as 60% of some Americans’ retirement savings. But while the S&P 500 continued to crash, gold’s price rose—and effectively rewarded anyone who had diversified their portfolio.
Of course, gold is not the only precious metal that you can place in your precious metals IRA; diversification of the precious metal types held in the IRA can help your portfolio’s value to endure.
Diversity extends through the metals in your portfolio.
This diversification has played out positively in previous periods of economic difficulty. For example, during the 2008-2012 recession, not just gold but also silver showed off its ability to endure through economic crisis; even in the most harrowing conditions, it continued jumping up in value by almost 450%.
And more recently, a scientific study showed that diversification in precious metals helped investors endure the economic volatility in 2020 during the early days of the Covid-19 pandemic.
You get the idea here. Generally all metals deemed precious make great hedges against economic downturns.
So if you want to move some of your retirement into a precious metals IRA, the gold or silver that you select will provide many of the same benefits.
What are the benefits of Placing precious Metals in an IRA?
- Diversify your retirement savings — This is worth repeating: don’t put all your eggs in one basket. Diversification will help to safeguard your savings.
- Limited supplies could result in future gains — Precious metals are finite; that’s what makes them precious. And as silver and gold continue to be used in medical and industrial sectors, there will be sustained demand for them.
- Secure your purchasing power — Longtime investors in gold and silver have seen their holdings maintain their purchasing power. As the U.S. dollar declines, the value of precious metals usually goes up.
- Converting to a precious metals IRA is simple — Jumping through a bunch of hoops is not required. All it takes is an eligible 401(k) or an IRA (or other less common retirement accounts) to easily transfer to an IRA backed by gold, silver or other precious metal assets.
How to Open a Precious Metals IRA
Let’s take a look at how simple it is to get started.
Step 1: Open the account — starting with your funding source
To start a precious metals IRA, you will first need to consider how you will fund this account… will you transfer an existing IRA or perhaps roll over a 401(k) from an old employer? Whichever way you begin, given the support that Birch Gold Group provides during the process, we require that you start with an account value of at least $10,000.
Like a conventional IRA, you can move your retirement account to a precious metals IRA with no tax penalties. With Birch Gold, you will have a Precious Metals Specialist assigned to help you through the entire process.
You will begin by transferring your funds to a custodian who specializes in precious metals IRAs, such as Equity Trust Company and STRATA Trust Company. All custodians are held to the highest standards by Birch Gold and only those with A+ ratings from the Better Business Bureau are selected.
The following accounts are eligible to be rolled over into a precious metals IRA:
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Eligible 401(k), 403(b), 457, TSP, and more
Step 2: Choose your precious metals
The good news is you don’t have to make this decision on your own. Your Precious Metals Specialist at Birch Gold Group can provide you with information and even make recommendations based on your current situation.
For example, what are your choices? Your Specialist can go over the metals choices in more detail with you. There are four precious metals that are approved to become a part of your IRA. The IRS has determined some specific criteria you will need to follow to make sure they are eligible.
- Gold
- Silver
- Platinum
- Palladium
Step 3: Make your purchase
Having determined what you want in your portfolio, you are now ready to purchase precious metals.
Your Specialist will confirm this with you before walking you through the necessary paperwork.
Once the purchase is made, your metals will be sent on your behalf to a depository.
Okay, so then what is the role of the custodian?
While you will not have a lot of direct contact with your precious metals IRA custodian, they still play an integral role in managing your retirement account.
Custodians are not individuals, but rather financial institutions that are responsible for managing the storage assets in your account. The custodian also helps complete transactions, execute withdrawals, and handle the paperwork. In a nutshell, they keep track of your account and ensure your assets are where they should be.
Step 4: Your precious metals are stored at a depository
Your Precious Metals Specialist will give you a list of options to store your gold and silver and walk you through each of them.
This list includes the Delaware Depository, where your metals are insured up to $1 billion. Another option available for storage is with Brink’s Global Service — the largest non-bank, non-government holder of precious metals in the world — located in New York, Los Angeles and Salt Lake City.
Step 5: Keep an eye on things
The best way for you to have peace of mind is to connect directly with a Birch Gold Specialist, who will always be there to provide you with an up-to-date buy-back quote. These quotes tend to be more detailed and accurate than the statements you will receive from your custodian.
You will continue to work with the same Specialist who walked you through setting up your precious metals IRA, and who knows your needs and retirement goals.
What is the cost to set up & Maintain a Precious metals IRA?
We recommend you start with a minimum of $10,000 in a retirement account to set up a Electrum Gold precious metals IRA.
Below is a list of fees for the custodian and depository that most customers of Electrum Gold use.
One-Time Fees:
Account Set Up Fee: $50
Wire Transfer Fee: $30
Annual Fees:
Storage/Insurance: $100
Management Fees: $100
Please speak to your Precious Metals Specialist to learn more.
Please Note: When you set up an IRA with the custodian that most customers of Electrum Gold use, you will NOT be charged annually as a percentage of assets under the custodian. In other words, no matter how large your account, you will pay the same $200 in annual fees.
How Safe are your Physical Precious Metals when Stored in an IRA?
To protect your savings, Electrum Gold helps you create an account with a reputable, qualified custodian who will facilitate tax compliance (keeping up with law changes) so your investments remain legal over the long term.
Additionally, your metals are protected by one of the approved depositories listed above.
If you have any additional questions about storage, please contact your Electrum Gold Specialist.
Which Precious Metals are Eligible?
The precious metals eligible for placement within an IRA have proven track records over thousands of years. These are the metals that transcend government influence — they are tangible and cannot be printed like paper money or stored as a number on a computer file.
Gold, silver, platinum, and palladium — these precious metals are popular for use in self-directed IRAs because of their long-term investment track record:
- Gold — a highly prized symbol of wealth since the earliest records of history
- Silver — used for thousands of years in coinage, jewelry, tableware, and more
- Platinum & Palladium — similar histories to gold and silver, these two precious metals are known for their catalytic properties and are still heavily used in industrial processes
Here is a detailed look at each metal’s current eligibility rules on what you can specifically invest in:
Gold(.995 minimum fineness, except for the American Eagle) | Silver(.999 minimum fineness) |
Platinum(.9995 minimum fineness) | Palladium(.9995 minimum fineness) |
Learn more about how a precious metals IRA can help you reach your individual retirement goals with a free information kit, or call us and speak to one of our Specialists at 602-573-3101.