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How Much Should You Invest in a Gold IRA?

To enjoy the biggest tax benefits, consider maximizing your gold IRA contributions

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Gold can be a valuable part of your investment portfolio. Unlike more volatile investments (ie stock), gold has historically held its value during times of economic trouble. It’s a Good hedge against inflation And a way Diversify your investmentsThat can help balance risk and reward in your portfolio.

One of the How you can invest in gold is with a Gold IRA. IRAs are retirement accounts with attractive tax advantages. While regular IRAs have investments like stocks, bonds and mutual funds, gold IRAs hold — you guessed it — physical gold. This makes them an easy way to include gold in your investment portfolio and enjoy some tax benefits.

But how much money should be put in a gold IRA? In this article, we’ll explore factors to weigh when determining the right amount for you. You can start exploring your gold IRA options here.

How Much Should You Invest in a Gold IRA?

There are several factors to consider when deciding how much to put into your gold IRA. Here are three of the bigger ones.

Contribution limits

Three now Gold is a type of IRA, and how much you can contribute depends on which type you are. For tax year 2023, the contribution limits are:

Traditional Gold IRA: $6,500 ($7,500 for persons 50 and older)Roth Gold IRA: $6,500 ($7,500 for persons 50 and older)General Employees Pension (SEP) Gold IRA: Up to 25% of your self-employment income or $66,000 (whichever is greater)

If you contribute more than the annual limit to an IRA, the IRS charges you a 6% penalty tax on the difference. For example, if you contribute $1,000 over the limit, you face a $60 penalty tax. So be sure to keep the contribution limit in mind to maximize your savings without penalty.

To learn more about investing in a gold IRA, request a free information kit today.

Portfolio diversification

Experts say gold should make up 5% to 10% of your portfolio. This enables you to enjoy the stability of gold prices and offers opportunities for other, potentially higher-reward investments, such as stocks. A mix of high- and low-risk assets means your portfolio won’t suffer too much over time if one asset underperforms.

Your financial situation

To enjoy the biggest tax benefits, you should aim to maximize your Gold IRA contributions — in other words, pay the full contribution limit. But your situation may not allow for it. Retirement investing is just one part of a financial plan, and focusing only on it shouldn’t neglect your other important money goals.

For example, if you have a lot of high-interest debt, you should work to pay it off while contributing to retirement savings. Otherwise, the interest you earn may exceed any potential earnings you could have from the investment. The average historical return on IRAs has been around 6% to 10%, while the average credit card APR is currently around 24%.

Don’t ignore your IRA investments while you pay off your debt; Balance the two goals to set yourself up for greater long-term success. Over time, the more debt you pay off, the more you can contribute to your IRA.

Bottom line

how much should you A gold IRA investment Depending on your investment and retirement goals and current financial situation. If you need help calculating your ideal contribution amount, contact a financial advisor or tax professional for customized advice.

MoneyWatch: Managing Your Money

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