Deciding what your retirement portfolio should consist of is not a simple process when there are so many options available to you. Many investors go for mutual funds, IRAs or Roth IRAs, index funds, target date retirement funds, or a plethora of other underlying assets that may make up any basket type fund.
Another asset to consider is alternative investments. Adding an alternative investment, such as commodities or precious metals like silver and gold, to your retirement fund can help not only with diversification but with risk mitigation as well. What you may be wondering is if adding alternative investments into your retirement portfolio is the right choice for you.
Types Of Gold Investments For Retirement
The first thing to consider when contemplating whether or not to add gold to your list of investments is the various forms this kind of investment comes in. Just as stocks range in price and business, mutual funds are open to being optioned to certain asset classes, and index funds are able to track different underlying equities, gold investing is no different.
- Gold IRA
A gold IRA is exactly what it sounds like – an IRA that comes fully invested in the asset gold, and not a diversified portfolio of stocks or any other holdings. A prime example of this type of investment is the Goldco Gold IRA. Gold IRAs often come with higher fees in comparison to your more easily accessible IRAs, mostly due to it being a specialty investment, along with the physical holding of gold by a verified storage facility.
Gold IRAs can serve as a great secondary investment to put some excess or speculative retirement funds into as they are generally perceived as a means of mitigating against the risk of inflation and value loss that comes with investing in any dollar-backed assets. This is because gold and precious metals have been known to have an inverse relationship with the value of the dollar with the cost of gold rising as the value of the dollar declines.
- Gold Bullion
Another option is, of course, gold bullion that can be physically purchased. Gold bullion comes in many different forms, ranging from coins, bars, and other spinoff cuts of real gold, with each of these forms coming in different sizes for investors to choose from.
There are also stocks of gold mining companies available for purchase, gold ETFs, gold futures or options, and of course the option to purchase gold as a metal commodity on the market. This range of virtual investments presents a range of choices that each bring their own unique risk and upside to the table, but aren’t typically used for retiree investing too often.
Purchasing a stock in mining companies is generally one of the more standard investments of the group, with gold ETFs providing another generally safe asset to hold, the same going for gold as a commodity if you’re tracking the price in relation to the dollar or plan on holding long-term, which is perfect for retirement.
- Futures and options
Gold futures and options, on the other hand, present a different level of risk. They’re generally an investment vehicle for day-traders and short-term investors looking to profit in the near future. By buying a future or option on gold, you agree to purchase or sell the asset at a given price on a given date. This can either result in profit, or missing out on one by short-selling the growth. Options are considered safer than futures because of the fact that you’re agreeing to the right to purchase, not the requirement to. Generally speaking, futures and options are not often part of retirement accounts.
Apply This to Your Retirement Accounts
As you can see, there are an abundance of investment opportunities for retirees to choose from when it comes to gold, with the safest and most popular option being the gold IRA account. Alternative investments present even more ways to invest in alternative assets like gold, and may be something you can consider adding to your portfolio.
Gold is not an objectively good or bad investment – its usefulness to your retirement investing strategy depends upon your unique financial situation and diversification preferences. Gold is a quality alternative investment, and one that is considered by many when making tough investing decisions that will affect their future.
Some parting wisdom is of course, don’t put all of your golden eggs in one basket, but it doesn’t hurt to consider adding a few to yours.