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Gold IRA vs Gold ETF: Which is Right for You?

Both a gold IRA and gold ETF can help you diversify your investment portfolio.

Getty Images/Mohd Azri Suratmin/EyeEm

If you are looking to take advantage today Competitive gold prices And Your portfolio is diversified With precious metals, there are a few different options.

One way you can hold gold is by storing actual gold coins or bars — however, this method requires you to physically secure your gold in a safe place, which can be expensive.

To avoid the hassle, you can instead opt for a variety of investment accounts that allow for alternative investments like gold. Below, we’ll go through the details and differences between these two options and how to decide which one might be right for you.

Before you get started, learn more about adding this type of investment to your portfolio with a free gold information kit.

What is a Gold IRA?

A Gold IRA Like other individual retirement accounts designed for your retirement savings. Technically, the IRA you use to invest in gold is a self-directed IRA. This means that you manage all the assets in the account.

Like standard IRAs, Gold IRA Tax advantaged account. You can choose between a traditional IRA (using pre-tax dollars that are taxed when withdrawn) or a Roth IRA (with after-tax dollars that are tax-free until you withdraw). The IRS limits the amount you can contribute across IRAs each year, something you should keep in mind if you plan to open multiple IRAs or if you already have a standard IRA. For 2023, the contribution limit is $6,500

if you Choose to invest in gold with an IRA, you must follow the rules required by the IRS Although the agency does not allow collectibles to be held in IRAs (and considers gold collectible) it does make exceptions for certain types of qualified gold bullion and other precious metals.

You must also invest with a qualified custodian, such as an authorized nonbank trustee or custodian. The custodian you choose will usually help you set up your account, purchase gold and provide storage options.

Talk to a professional to learn more about gold investing, including the requirements and the options available to you today.

What is a gold ETF?

If you have a market-oriented investment portfolio, you may already be familiar with exchange-traded funds (ETFs). In practice, ETFs are similar to mutual funds; These funds typically hold several different assets or investment types and are traded on exchanges.

Gold ETF Also helps you avoid the need for physical storage of gold bullion — the funds you choose either hold physical gold and follow gold prices over time, or invest in companies involved in gold production.

You can invest in a gold ETF with an online brokerage. As with any new investment, it’s important to check the fund’s past performance and any fees you may have to pay before buying.

How to choose the right type of gold investment for you

Investing a portion of your portfolio in gold can help you diversify your holdings – which can help you be better prepared. A time of uncertainty or market volatility.

Your personal goals and risk assessment can help you determine which Types of Gold Investments May be the most meaningful for you.

A gold IRA can be a good option if you are focused on retirement savings and want to benefit from tax-advantaged growth over time. Just make sure you pick a custodian that will ease the process of choosing gold-worthy forms and keeping it safe. You can choose a gold ETF instead, on the other hand, if you’re looking for liquidity and the freedom to move around your investments more easily. Since you buy these funds through a brokerage, the process can be simple. A trusted financial advisor can help guide you through investment options.

But it’s also important to remember that these gold investments aren’t necessarily mutually exclusive. You can use an eligible custodian and invest eligible gold in a self-directed IRA. But you can use an IRA to invest in funds that hold physical assets of gold and typically track the price of gold or other gold-related funds.

Consider talking to a financial professional who can help you create the best investment plan for you.

Learn more about all the best gold investment options available here today.

MoneyWatch: Managing Your Money

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