Gold IRA Investments:
The Most Tax-Efficient Way of Owning Gold. Watch the video above to learn about the advantages of investing in gold in your IRA account.
Many people wonder whether or not gold is a good investment. It can be, but there are risks involved. One of the best ways to minimize the risks of investing in gold is to do so through an IRA because a gold IRA investment is the most tax-efficient way of investing in gold.
Gold has been a lure for investors for quite a long time, centuries in fact, due to its beauty and rarity. These two qualities explain why almost half of the worldwide gold demand is by the jewelry industry. But gold bullion–gold bars and coins–accounts for nearly one third of global demand. Investing in gold can of course provide good returns. For example, if you had invested in gold in 2004, you would have realized a pretax annualized return of more than 12% over the subsequent ten year span. But it can also be a risky investment. The price of gold has recently dropped precipitously. In 2012, your gold investment would have resulted in an annualized pretax loss of over 14%.
A disadvantage of gold (and other precious metals) as an investment is that it is classified as a collectible for tax purposes. This classification is less advantageous than the capital gains classification. Gains on collectibles held for a year or less are taxed as ordinary income. When it comes to long term gains, held for over one year, normal capital assets are taxed at the preferential rate of 15% for long term capital gain, but collectibles such as gold are taxed at 28%.
A way to get around this, to maximize aftertax returns, is to put the gold into an IRA, which is a very tax-efficient investment vehicle. This helps out a lot with the aftertax return on gold, and for that matter on other precious metals such as silver, platinum, etc. Gold IRA investment is actually pretty new. In the past, you could use closed-end funds, mutual funds and so forth as investment vehicles for gold, but it wasn’t until 2007, when the IRS decided that gold ETFs were not collectibles for IRA investment purposes, that it finally became very advantageous to invest in gold through an IRA.
Gold IRA investments are now treated the same as any normal IRA investment. That means that the gains from gold sold within an IRA are not taxed until the proceeds are distributed to the tax payer, at his or her marginal tax rate. This is a big and a very beneficial change–one that I recommend you take advantage of if you are thinking about investing in gold.
If you have any questions about gold IRA investment, or any other financial matters, you can contact me by phone at (615) 727-2295
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