Golden Opportunities: How a Smart Investment in Gold Can Inflate Your Retirement Income
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Why Gold Can Be a Good Investment for Your Retirement
Investing in assets can put you in a better position by the time you’re ready to retire. While stocks and real estate have received plenty of attention over the years, gold remains a reliable investment that has been around for thousands of years. It’s an essential resource for many industries, a medium of exchange, and a safe-haven asset during geopolitical unrest or periods of market volatility.
How Gold Can Generate Retirement Income
Gold is a hedge against inflation and can thrive during economic uncertainty. That last advantage is a key distinction that separates it from stocks and real estate. However, physical gold doesn’t produce yield like dividend stocks or cash flow like investment properties.
Using Precious Metals to Generate Retirement Income
Fortunately, it’s still possible to use precious metals to generate retirement income. This guide will explain several ways to use gold for retirement income.
Open a Gold IRA
A gold individual retirement account (IRA) allows you to accumulate physical precious metals in a tax-advantaged account. You won’t have to worry about gold storage, as the IRA’s custodian will handle it. You can then cash out on your gold holdings when you need to cover living expenses.
The IRS Sets Limits for Contributions
The IRS sets limits for how much you can contribute to an IRA, whether it’s a conventional or gold IRA. If you make the maximum contribution to a gold IRA, you can’t contribute to another IRA. The maximum contribution for traditional and Roth IRAs is currently capped at $7,000 per year for those 49 and younger.
Opening a Roth IRA
Anyone can open a Roth IRA, but your modified adjusted gross income must be below $146,000 to contribute the full amount. Investors who earn too much for a Roth IRA can use the backdoor method to fund it. This involves moving funds from a traditional IRA – which doesn’t have income restrictions – to a Roth IRA. Some gold IRA providers give you the flexibility to set up traditional and Roth IRAs.
Learn More about the Best Gold IRA Companies
Learn more by reading our guide to the best gold IRA companies.
Gold Stocks: A Different Option
Gold stocks are easier to buy and manage than physical gold. You also wouldn’t need a separate IRA just for gold investments. However, gold stocks can underperform the precious metal due to several factors.
Why Gold Should Be a Part of Your Retirement Strategy
Putting all of your eggs in one basket is very risky, and that’s why many experts recommend diversifying your portfolio. Gold can be a valuable part of the mix, as its returns aren’t correlated to the stock market. The prices of precious metals can hold steady or gain value when stocks and real estate enter corrections. And while expert opinions on gold vary, many agree that investors shouldn’t allocate more than 5-10% of their portfolio to the precious metal. This amount of exposure provides a good buffer against inflation while allowing you to allocate funds to other asset classes.
Should Gold Be a Part of Your Retirement Strategy?
And yet, many agree that investors shouldn’t allocate more than 5-10% of their portfolio to the precious metal. This amount of exposure provides a good buffer against inflation while allowing you to allocate funds to other asset classes.
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