Gold IRA vs. Physical Gold: Which is Worth the Investment?


Gold IRA vs physical gold has been a long-debated investment. Both investments can help you resist almost any economic crisis, but to choose which investment is best for you will lie in your knowledge about handling gold assets or other precious metals. Gold IRA investments are best if you have little to no knowledge about gold investments and no proper storage place. But if you already know the ropes, going for a direct physical gold investment can save you time and money.

Here’s a side-by-side comparison between these two investments: 

Gold IRA Investments

Physical Gold Investments

Direct contact with Gold IRA companies

Does not need assistance from Gold IRA companies to buy physical gold assets

The company will assign custodians to create all paperwork necessary (account setup, tax, buying gold assets, etc.)

No assistance with the papers necessary to own physical gold assets.

The company will safely secure your gold assets in company-owned storage.

You will require to purchase or rent a secure storage for your gold assets.

Gold IRA grows tax-free until withdrawal

Will automatically be subject to taxation once purchased

What is Gold IRA?

Gold IRA has been a popular investment for various retirees worldwide. You acquire this type of retirement account from a company that supports gold IRA investment. Investors are qualified to hold any physical gold (gold bullions, gold bars, gold eagle) and approved precious metals such as silver (silver coins, silver eagle), platinum, and palladium.

Different Types of Gold IRA Investments

There are three common types of gold IRA investments which are:

  • Traditional Gold IRA- A Traditional IRA allows pre-tax contributions, which means you can see your money grow tax-deferred. When withdrawing, you are subjected to taxation similarly to other income sources.
  • Gold Roth IRA- in a Roth gold IRA, your investments are funded by post-tax funds that are free from regular income taxes until utilized to support retirement allocations; only then are they subjected to relevant taxes.
  • SEP (Simplified Employee Pension) gold IRA- Investments to a SEP can only reach at least 25% or the lesser standard IRA contribution limit. This ira account is a wise strategy if you are self-employed or working for a smaller enterprise. Similarly, you will only get taxed when you withdraw from this account.

How Does Gold IRA Work?

The Internal Revenue Service also allows investors to use old physical assets, such as bullion coins, bars, and certificates. Gold IRAs can help you have a secured retirement without worrying about inflation affecting your investments. An IRA custodian must hold this individual retirement account separately from conventional retirement accounts. However, some rules, such as distributions and contribution limits, are still the same.

How Much is a Gold IRA? 

You will need to pay for three set-up payments for a gold IRA.

  • The one-time account set-up fee can start from $50 to $150. Other Gold IRA companies can choose to change the price for a larger initial deposit. 
  • A yearly custodial fee can range from $50 to $150, depending on your gold ira's size.
  • Storage fees will depend on the amount of gold you have, which the depository charges from $50 to $300 yearly.

How Can I Invest in a Gold IRA? 

Investing in Gold IRA is not as simple as purchasing gold products on the market. It is a step-by-step process that includes scouting for the best gold IRA company that offers the convenience and benefits you need. 

Once you find a trusted company where you want to invest your retirement assets, the company will provide different services, such as setting up your account, purchasing metals, transferring funds, and storing your properties at an authorized depository. 

Here's the list of one of the most trusted gold IRA, silver IRA, and other precious metals IRA companies in the United States of America:

  • Augusta Precious Metal
  • American Hartford Gold Group
  • Regal Assets CA
  • Noble Gold
  • Oxford Gold Group
  • Birch Gold Group
  • Patriot Gold Group
  • Lear Capital
  • Advantage Gold
  • Goldstar Trust Company
  • Strata Trust Company

Some gold IRA companies also provide custodial services for IRA accounts, such as handling paperwork and various tax filings required to preserve your retirement account.

Gold IRA Tax Implications

Traditional gold IRAs do not often sustain many tax difficulties, as your IRA investments are taxed at regular income rates. Because of this, all the assets that go into your gold IRA account grow tax-free until you wish to withdraw. Once you want to withdraw your investments, the custodian assigned will then subject your assets to regular income taxes.

Now, let's discuss more about investing in physical gold. 

What is Physical Gold?

Similar to Gold IRA, physical gold is one of the most long-lasting assets you can protect during economic inflation or deflation because of the continued rise of dollars. The gold coin is the most common form of physical gold owned by investors, commonly known as the American gold eagle. But you can also invest in physical gold through gold bullion or gold bars, gold futures, gold stocks, and Exchange Traded Fund Gold (ETF).

How Can I Invest in Physical Gold?

Investing in either gold IRA or physical gold offers the same security of experiencing value depression. But suppose you want to invest more in physical gold or physical precious metals. In that case, you will need to interact firsthand with dealers outside of traditional brokerages.

This is one of the significant differences between investing in a gold IRA, where custodians mostly do all the paperwork from setting up your account to buying and storing. When investing in physical gold, you will probably do everything from purchasing to adding another cost for storing your bought assets and acquiring insurance to secure your investment. Delaware Depository is one of the most preferred companies that offer proper custody and safekeeping of any physical gold assets or precious metals bullion.

Should You Own Physical Gold?

Owning any gold assets or other precious metals is advantageous if you want a secured retirement account. But investing in physical gold will take many processes, from papers to purchasing to storing. If this is something that you don't have the expertise and enough resources for, then you might want to consider other safest options.

Process of Purchasing Gold

You can purchase a physical gold bar online through a simple process. One of the easiest ways to get your hands on physical gold is through licensed retailers online. Expected investors can search for gold bar products on trusted retail websites. You can select gold by weight, quantity, and price.

Upon receiving the gold bars, you should keep them sealed to prevent unwanted scratches and store them in a safety deposit box or a home safe. You should also expect to pay for delivery fees and insurance.

Physical Gold Tax Implications

I consider any form of physical gold a commodity. When purchasing these products, you are automatically subjected to taxation on either your capital losses or profits. Also, you are required to report the total value of your treasures as your income on your annual income tax return.

How Much Gold Should a Person Own?

According to experts, you should own only up to 5% to 10% of gold in your retirement portfolio. Both gold IRA and physical gold are worthy retirement investments. Both options have their long list of benefits and disadvantages, but when choosing which option is best, talking with your financial advisor can help because this decision will focus more on how much you know about gold investments. 

Suppose you are new in this sector; investing in a gold IRA effectively ensures that all your assets are well taken care of. On the other hand, if you like to handle your investments on your own and already know how the gold investment industry works, choosing to invest in physical gold is also not a bad idea. 

About the author 

Rosebel Lacastesantos

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