Most people start investing in their retirement plan and saving up as soon as they begin working. After all, financial security is important to everyone and we want to make sure that we have enough money even after we stop working. And, various retirement plans exist to help us achieve that particular goal, including the plan known as the 401k.
Chances are you already know enough about the 401k accounts, especially if you’ve had one for a while. You know that it is an account that employees sponsor. You also know that it allows you to invest a portion of your savings in stocks, bonds, and similar assets. Go here to get an even better idea about what this account actually entails.
We are, however, living in pretty uncertain times when it comes to the economy and finances, so you may be wondering whether those stocks and bonds are really enough to help you build the perfect retirement portfolio, or if you may be able to do something more. Something better and safer. Recently, you may have heard about people investing in gold, silver, and other precious metals, which must have gotten you a bit curious. In short, you’re wondering if you can do this with your 401k.
Can You Invest in Gold With Your 401k?
It is no wonder that you have become interested in investing in precious metals, especially if you have done some research on these assets and the benefits they bring to the table. For one thing, gold has always been known as a rather valuable asset. The way it behaves during inflation just adds to its value. To put it simply, precious metals, such as gold, tend to increase in value whenever the cost of living increases, which makes them the perfect hedge against inflation, and which also makes them rather appealing to investors, including yourself. Furthermore, portfolio diversification is always a good idea, and if you can diversify with such stable and valuable assets, there is absolutely no reason why you shouldn’t.
Clearly, there are plenty of reasons why you should invest in precious metals. But, this still doesn’t answer the question of whether you can do this through your 401k account. If you have read anything about 401k by now, you know that they offer rather limited investment options. In short, they provide you with the opportunity to invest in stocks and bonds. Chances are that you haven’t come across the option of buying gold through it just yet.
Does that, however, mean that you won’t ever be able to buy precious metals if you have this particular retirement account? Well, the good news is that it doesn’t. When you take time to get more information on 401k gold investing, you will realize that there are ways for you to own precious metals and invest in them for your retirement even if you have this particular account. Sure, things are a bit more complicated than if you, for example, had an IRA right from the start. But the bottom line is that this can be done.
How Can It Be Done?
Wondering how it can be done? Well, there are a few options. First off, there is the idea of investing in precious metals funds, and some 401k plans offer this solution. The idea behind this is that mining companies will make more money if the price of gold rises, but that doesn’t always seem to be the case. This is why this option may not be the best one for you, even if it does allow you to diversify your 401k a bit.
Next, you can also use this particular account to get gold ETFs. This is a viable solution if you go for the brokerage option and thus decide to invest your funds through a regular brokerage account, while actually maintaining the tax advantages of the 401k plan. The clear downside here is the fact that you aren’t exactly buying physical gold. Instead, you are, once again, investing in shares.
So, as you can see, most of the options you have are still limited. Meaning, therefore, a 401k is suitable for people who would like to stick to how2invest in shares, stocks, and bonds. What if, however, you want to invest directly in gold? Will that ever be an option if you have this specific account? Fortunately, there is something you can do about it.
Why a 1 Carat Princess Cut Diamond Will Look Perfect on You
IRA to the Rescue
To cut to the chase, what you can do is roll over your 401k funds to an IRA. Not just to any IRA, though, but to a specific type of IRA, called a self-directed Individual Retirement Account, also known as a gold IRA. This is actually the only retirement account that allows people to buy physical gold and other precious metals and that, therefore, offers the direct precious metals investment option. So, if you want to invest in these particular assets, the best thing to do is roll over those funds you have in your 401k to a gold IRA.
How can you do that the right way, though? You certainly need to be careful in the process, aiming at making sure that you aren’t making mistakes that could lead to penalties. And, there are two different rollover options that you can use to your advantage and avoid penalties if they are right. So, let me tell you what those are.
First off, there is the direct rollover, which consists of you transferring your funds directly from your 401k to the newly set up gold IRA. On the other hand, an indirect rollover consists of you withdrawing your funds and then depositing them into the new account. Naturally, in order for the indirect rollover not to incur any penalties, there is a time frame during which you have to complete the withdrawal and the deposit, and it is 60 days. Both of these options will allow you to start buying gold and other precious metals and thus make your retirement portfolio more secure.
Also See:
Lab grown yellow diamond: A symbol of beauty elegance and luxury
