As most of us are quite aware nowadays, we’re in a time of economic strife. To say that it’s a bit stressful right now is probably an understatement, really – there’s a ton of pressure on all of us to maintain our finances on a day-to-day basis while still saving and investing for our futures. It’s not easy, that’s for sure.
It leaves us with some lingering questions as well. What should we be investing in to ensure our futures are safe, right? After all, everyone wants to have a safe and secure retirement, but that’s easier said than done.
While we can look at online content and reviews to get an idea of what might be the “right” move, there are still a lot of variables to consider. For instance, we have to decide what types of assets we want to add to our investment portfolios. Beyond that, it’s also important to decide what types of accounts we want to open.
If you’d like to hear a rundown of some of those different types of retirement accounts (specifically in regard to savings and investment ones), then keep reading. We’ll also be discussing some of the asset classes, specifically focusing on precious metals.
How Does Saving for Retirement Work?
Perhaps the trickiest part of preparing for retirement is figuring out how to actually start that process. Sure, one option is to just go to our bank and ask to open a new savings account. Realistically, though, this probably won’t be enough in the long term.
Did you know that it takes millions of dollars to retire “comfortably?” This metric was measured by taking standard of living into account. Essentially, it means that to keep your standard of living relatively the same as what it was while you were working, you really do have to have a lot set aside.
That said, though, bear in mind that we are talking about overall net worth. So, it’s not necessarily about what you have in your wallet directly, but rather, how you’ve invested your money and what holdings you have.
Types of Accounts
To get an overview of the types of retirement accounts out there, try this page out: https://journals.sagepub.com/doi/abs/10.1509/jmr.08.0355. Today, we’ll mostly be focusing on IRAs, otherwise known as individual retirement arrangements. They’re pretty simple, really, but before we dive in, there are also 401(k)s.
401(k)s are opened in conjunction with your employer, although if you change jobs, you can take the account with you. You put a percentage of your paycheck in each time, and your employer matches that to a certain extent. Typically, those details are ironed out when you are
first hired, so don’t be afraid to review your contract if you aren’t certain.
Shifting our focus to IRAs, there are a few varieties of them. This allows all types of investors to at least consider them, which is quite nice. The main three are Traditional, Roth, and self-directed. Each is designated as such based on the tax benefits involved, which some of the resources above can help to explain.
Traditional ones have the withdrawals taxed rather than the deposits. Roth IRAs are the inverse of that. Self-directed ones can go either way depending on how the opener decides, so it’s still good to know some of the intricacies there.
What do Precious Metals Have to do with this, then?
So – you saw it in the title. We mentioned gold, and you’re probably waiting for us to cover it. Don’t worry – that’s what we’re handling here in this section. For now, check out this article to understand why gold is considered an asset in the first place!
The main reason, as you may already be familiar with now, is the fact that it’s a type of commodity. Commodities (at least in the world of investing) are raw materials that will be processed at some point in manufacturing. We can invest in them similar to other classes of assets, but they tend to work a bit differently depending on what they are.
Gold is just one of the “big four” precious metals that most investors keep an eye on. The other three are silver, palladium, and platinum. Those are typically not kept as bullion, making them a bit more difficult to include in an IRA.
Gold or precious metals IRAs are a type of self-directed one, although you can get the help of a broker to manage it. Most of the sellers of precious metals offer financial advice as well if you ask and if you want it, so it’s just something to keep in mind if it’s a bit intimidating to have to manage an account like this entirely on your own.
On that note, something that you should definitely be aware of is that picking a gold investing company is really important to overall success. There are some that are scams, after all, which is why we mentioned reading reviews above. Try some from industry professionals as well as from other customers to get a wholistic view of what you’re getting yourself into.
Are Gold IRAs worth it, then?
Finishing out today, let’s discuss whether or not they’re actually going to be worth the investment. Most financial experts these days say yes, if only because gold can be used as a hedge against inflation. This means that it can be an effective way to protect our wealth from inflation.
Think of it this way – a dollar will lose its spending power over the years. However, a bar of gold doesn’t really experience that decrease in value. Historically speaking, the prices of preciousmetals have remained relatively the same because they are always highly sought after by all sorts of people.
So, while it might seem a bit strange to buy some bullion right now, it certainly can’t hurt anything. It can help to add some variety to your portfolio on top of everything else that we’ve mentioned as well, which is a big deal.
How to Compare Good Gold IRAs.
Does A Gold Investment Make Sense?
