There’s always talk about buying silver and gold in the form of an IRA, but does that mean you should do it?
If you’re unsure if it’s right for you, we can help break down what it is and how it works.
What is a Silver IRA & How Does it Work?
A silver IRA is a self-directed IRA in which you purchase physical silver bullion and is an excellent way to distinguish your financial portfolio.
You do this through an external, government-approved custodian and receive all the tax benefits of a regular IRA while being able to invest in assets not usually available for standard accounts.
What You Should Know About Silver IRAs
IRAs are an essential aspect of retirement planning, and it’s never too early to start saving. Knowing the pros and cons of having a silver IRA could help you formulate a plan that fits your needs.
Silver IRA vs. Traditional IRA
Since a silver IRA, and all precious metal IRAs for that matter, are considered self-directed IRAs, they are not done through large firms such as banks. Instead, you must hire a separate non-bank custodian or trustee to manage your account.
While an IRA will conventionally be composed of stocks and bonds, a silver IRA is the financial ownership of actual, physical silver.
Of course, it’s different from simply buying silver because you will receive all the tax benefits of an IRA (though you will not have actual access to the silver as it will be kept in a depository).
How Do I Setup a Silver IRA
The institution you will create your silver IRA with will be independent of the bank, and your custodian will be government-approved.
Once you have consulted a custodian and opened an account, you need to find a brokerage to buy the silver through and a depository to keep your silver.
All transactions and transfers will be done through the custodian and the broker, respectively.
Pros & Cons
Silver IRAs have their ups and downs, and knowing them is imperative to understand what they are and how they function.
Pros
- It diversifies your portfolio
- It fortifies your finances
- It’s reliable
- It’s cheaper than gold
- Silver prices generally go up over time
Cons
- Silver does not gain interest
- There may be associated fees
- You cannot invest physical silver you already own
Should I Setup a Silver IRA?
Silver IRAs are just tax-deferred assets you can buy but don’t have physical access to. Their value doesn’t fluctuate much, and there is steady growth over time, so they can be a practical way of protecting your IRA.
While a silver IRA isn’t a substitute for a full IRA, it can be an extremely important part of creating a solid and diverse portfolio.
FAQs
Can I convert my IRA to silver?
Absolutely. However, you will need an already established self-directed IRA. Once you’re ready to convert, you must simply contact your custodian about transferring your funds.
Keep in mind that there may be fees associated with doing this.
Can I convert my 401(k) to silver?
Not directly. You will have to have your 401(k) be deposited into your traditional IRA, at which point you will be free to roll over to a silver IRA.
What other precious metals can I back an IRA with?
Other precious metals that are IRA approved by the IRS are gold, platinum, and palladium.
What silver qualifies for an IRA?
In order for silver to qualify for an IRA it must be in the form of bullion bars or coins and must be 99.9% levels of purity.