Silver IRAs are a special kind of retirement account that offer you a unique feature. They are more popular all the time because you can own physical silver bars and coins in these retirement accounts, and all purchased with money that is tax deferred. Thanks to these abilities, these accounts appear to be an ideal investment plan, especially for retirement. Silver IRAs do provide numerous benefits, but there are a few negative characteristics that you need to know before you begin your rollover from traditional form of IRA to your IRA backed by silver. This way you will be aware of some things to watch out for in the process.
Pros of Silver Backed IRAs
There really are a great number of useful benefits to having a Silver IRA as part of your retirement strategy. Investing in tangible silver gives you the stability and safety of a hard asset and precious metal that holds its value well in times of trouble. You also have the possibility to benefit from price increases in silver while it is safeguarding your retirement portfolio from purchasing power declines and the ravages of inflation. Among the positives delivered by a Silver IRA are:
- Reasonable Costs to Startup – The startup fees in getting your new Silver IRA up and running are often reasonable, especially if you select a highly-rated IRA administrator such as Birch Gold or Regal Assets.
- Wealth Preservation – Silver protects your dollar’s purchasing power effectively over time. A silver dollar issued a hundred years ago has increased more than ten times in value over the last century.
- Intrinsic Store of Value – Silver is valuable because it is rare, in demand in numerous applications, and beloved around the world and throughout time. No government or agency is necessary for it to have and hold its own value.
- Potential for Silver to Go Up in Price – Silver has a track record of making good gains over longer term timeframes. This means that you may be able to sell it for significant gains when you decide to cash out one day.
- Protection and Hedge Against Inflation – Silver and the precious metals have protected investors effectively against currency devaluation throughout history. As dollars and other national currencies fall, the price of silver goes up apace. This is how owning tangible silver helps guard your future retirement assets against dollar declines. It is more important than you may know, as the U.S. Dollar has fallen over 90% as measured against physical assets such as silver and gold in less than 50 years.
- Diversifying Your Other Investment Risk – Silver effectively diversifies portfolios that are heavily based on paper assets like stocks and bonds, helping to level them out in risky and extreme markets.
- Better Control Over Your Retirement Investments – Another wonderful feature of Silver IRAs is that they are Self-Directed IRAs at the same time. This means that you are able to select additional investments that are IRS-approved beyond silver bars and coins. Some of the other investments that you may be involved with in these types of accounts are Real Estate, businesses, other physical precious metals, and franchises that all help to well diversity your retirement holdings.
- Tax Deferred Advantages – When you hold silver in this type of account, it is bought with tax-deferred money until you eventually withdraw it as a distribution. This means that even if you sell the silver, so long as you keep it in the Silver IRA account, you are not taxed.
- Ownership of Tangible Assets – Among the most popular features of these Silver IRAs is that they permit you to hold tangible silver coins and bars which have been approved for IRAs by the IRS. You can hold real silver instead of paper silver as with silver mining stocks, Silver ETFs, and silver futures.
Cons of Silver Backed IRAs
• Limits on Types of Returns – One downside to holding silver physically is that it does not provide you with interest, dividends, or rent. The only gains you are able to capture with silver are from higher silver prices. Silver is also famous for some wild volatility swings, which is why you should not get into silver positions with any money in your IRA that you might need soon. If you do not give yourself plenty of notice, you may have to sell your tangible silver at a lower price than you should. Silver has notched some terrific gains over the long term, but you need to be aware of the fact that it can pullback painfully along the way.
• Considerations of Storage and Fees – The Silver IRA regulations do not permit you to keep silver at home. Instead you must abide by the IRS’ rules that concern storage and custodians of the account. Your custodian is the one who will take care of the buying, selling, and transporting of your tangible silver to and from the third party storage vault. This does free you up from the concerns of having to arrange all of these elements personally, but there is a negative to this. You do relinquish a level of the direct control over the holdings, and you will pay an annual storage and administration fee for this loss of control. These fees often range from $250 to $500 each year, depending on who your Silver IRA administrator and storage facilities are. Overcoming these costs relies on the price of your silver holdings increasing so that you can stay above break even and realize profits.
• Restrictions in Silver IRA Funding – You are not able to simply send in silver you already possess in order to put tangible silver in your Silver IRA. It is strictly forbidden to purchase silver yourself and then hand it over to the administrator of your IRA. The way that this has to be done is by letting the custodian purchase silver for you. There are also limitations on the kinds of silver bars and coins that you are allowed to buy. These rules and restrictions have to be observed, or you will incur taxes and penalties on IRA money used to buy them.