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Opening a gold IRA can be a strategic move to diversify your investment portfolio and potentially enhance your returns. However, it's important to be aware of the associated costs.
When establishing or maintaining a gold IRA, you'll likely encounter various fees. For example, commissions may apply each time you purchase gold.
Additionally, if you choose to store your gold in a secure facility rather than at home or a local bank, you will incur storage and other related fees.
Understanding these costs is crucial to making an informed decision and maximizing the benefits of your gold IRA investment.
Before we get started, investing your savings is a serious task. When it comes to adding precious metals to your portfolio, how do you know which companies to trust?
That is why we have researched every company in the industry and selected the very few with the highest customer service standards.
This way you can easily compare the best companies in the business, and choose one that fits your needs and investment goals.
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Purchase and Account Minimums May Apply
Gold dealers that offer gold IRAs may require clients to maintain a minimum account balance of anywhere from $100 to $1,500. Furthermore, gold dealers may require customers to spend at least $1,000 on any given gold or precious metals purchase.
Most gold dealers allow clients to fund an account by rolling an existing IRA balance to a self-directed IRA. It's unlikely that an investor will trigger a taxable event by transferring a balance from an existing IRA to a new account as long as the transfer is completed within 60 days.
The presence of a minimum purchase requirement may influence an individual's overall investment strategy. This may be especially true for those who have a small account balance. For example, let's say that an investor wants to buy a coin that retails for $500.
However, the minimum purchase requirement imposed by a gold dealer is $1,000. In this scenario, an investor would need to consider whether it is in that person's best interest to buy a second coin or to simply invest in bullion.
A gold dealer or IRA provider may be able to provide more insight into an investor's various options and the potential pros and cons of each.
How Commissions Impact Returns
While not all gold dealers charge commissions on purchases, it isn't an unheard of practice either. Those that do charge commissions typically tack at least 5% to the price of the bullion or collectible item that an investor wishes to acquire.
In some cases, dealers will charge up to 10% of the purchase price, which can easily sap an account of hundreds or thousands of dollars. The only way to make that money back is through market appreciation, which can occur at an unpredictable rate.
Although an investor may plan to keep new or existing holdings for many years or decades to come, it's nice to know that holdings can be liquidated to lock in profits at any time. An ability to sell may also help an investor pivot between bullion and coins as market conditions change.
Any dealer that does charge a commission should let their customers know about it before a transaction is complete. Investors can use online calculators or other resources to determine how much their holdings would need to appreciate so that they can break even after fees.
Storage Fees Are Common
To learn everything there is to know about gold IRA fees, please read our article. This section here is just a summary.
Storage and administrative fees can further erode the value of an investor's holdings, so it's important to shop around when looking for a gold dealer to get the best prices. As a general rule, investors should expect to pay at least $5 a year.
In addition, they might be charged administrative fees of up to 2% of their total account balances. For example, if an investor's account was worth $1,000, that person would be charged $20 on top of the $5 flat fee.
The administrative or account maintenance fees may be waived for those who have relatively small balances. This can save a significant amount of money in the long run as the maintenance fee will increase as the account balance does.
For example, if an account balance rose to $10,000, the account holder would pay an extra $200 assuming a 2% dealer storage fee. That is money that could have been used to purchase additional gold and help an account compound faster.
It may also be possible to avoid storage fees by storing gold at a personal residence. However, those who wish to do so may need to tread carefully so that they don't run afoul of IRS rules. It may be a good idea to talk with a financial advisor about how those rules might impact plans to store gold held in an IRA.
Don't Forget About Transfer Fees
It's important to note that an investor owns any gold or other precious metals purchased from a dealer. However, if you decide to transfer that gold from one dealer to another, there will likely be a transfer fee.
That fee could be up to 10% of the total that is being sent from one facility to another. Additional charges may be incurred if gold is sent to another country.
Dealers May Include Markups
In addition to a commission, a dealer may mark up the price of gold bullion or specialty items made from this material. A markup is different from a commission as it simply increases the retail price of the item before any fees are accounted for.
Almost all retailers will charge a premium for collectible coins or similar items, and there is also a chance that they will charge slightly above the spot price for bullion. Spot prices and prices for collectible items should be listed on a dealer's website or otherwise made available before purchase.
Account Setup Fees
There is a certain amount of time and effort that goes into ensuring that an account is created and funded properly. Therefore, expect to pay a small fee to compensate a dealer for the resources put into ensuring that maintenance, reporting, and other tasks are taken care of. In most cases, account setup fees will range from $50 to $100 depending on the dealer.
Gold Dealers to Consider Partnering With
While many gold dealers offer IRAs, there are a select few who have earned a reputation for offering quality service at an affordable price. Partnering with these companies may allow investors easy access to the products that they want and the guidance that they might need to make informed investment decisions.
Our Top Pick - Unmatched Customer Service
Goldco: Protect Your Wealth, Tax & Penalty Free
Goldco is well known for its combination of quality service, ease of use, and low account minimums. Goldco does not charge IRA fees.
Goldco's Gold IRA Fees
The required minimum purchase at Goldco to start a gold IRA is $25,000. Goldco’s preferred Custodian charges a flat annual account service fee which includes a one-time IRA account set-up fee of $50. as well as a $30 wire fee.
Annual maintenance is $100, and storage is $150 for segregated storage or $100 for non-segregated storage.
Fees for gold storage and custodianship can vary depending on the company you select to handle these services (required by the IRS, as all IRA assets must be managed by a custodian).
Depending on the Custodian, storage fees can range from $10 to $60 per month, or as a percentage of assets, from 0.35% to 1% annually. Goldco does not charge any storage fees for cash transactions over $25,000.
Customers can get a full list of fees on the company's website, which makes it easy to calculate their total cost basis ahead of time. Investors can also get information about gold spot prices as well as insights about current economic conditions on Goldco's website.
This may make it easier to fully evaluate an investment opportunity before putting any money into the market, which may minimize the risk involved.
Those who are interested in partnering with Goldco can create an account online or by phone. This may be ideal for those who don't have access to a reliable internet connection or who simply want a person to walk them through this process.
Other benefits of signing up for a Goldco IRA include free shipping on orders over $500 as well as a buyback guarantee.
The buyback guarantee means that investors can minimize their risk regardless of market conditions. Generally speaking, Goldco will take back your gold coins, bullion, or other items at the top end of the market on the day that the transaction takes place.
Despite this guarantee, investors should be aware that their investments will incur some level of risk, therefore, it's important to have an entry and exit plan before making a purchase.
Goldco does have precious metals specialist who can help customers with any questions they have about physical gold and silver products.
Augusta Precious Metals
Investors can create their gold IRAs with Augusta Precious Metals online in a matter of minutes. After filling out the paperwork and paying the $50 account creation fee, clients can immediately start the process of buying gold.
There is a $100 annual account maintenance fee as well as a $100 annual storage fee. A fee of up to 4% is applied on all purchases of gold bullion and gold coins.
However, Augusta does offer a price match guarantee that ensures that customers can get a refund if they find lower prices elsewhere. Other promotions may be available to help existing clients get the most value for their money regardless of what they want to add to their portfolios.
For instance, free shipping is available for all orders over $500, and expedited shipping may also be available by calling the company's toll-free number.
In addition to competitive pricing, Augusta Precious Metals is known for its quality customer service. Clients can typically get help with account issues in a matter of minutes, and the company also has a robust customer education department designed to help customers navigate any issues that they might have without the need for outside intervention.
Furthermore, the company offers a level of transparency that exceeds what other gold dealers tend to provide. One of the first things that prospective clients will see is a brochure outlining reasons not to invest in gold as well as common tactics dealers might use to mislead investors.
Ultimately, those who decide to invest with Augusta will have heard both sides of the argument before doing so, which can help them save for retirement with confidence.
American Hartford Gold - best for bullion investors
American Hartford Gold may be the company that those who are just starting out want to work with. This is because they have no account minimum, which means that you can start with whatever money you have in an existing IRA or in your bank account.
There is also a loan program available to those who need help getting started on their journey to buying gold bars or coins.
Of course, a loan will need to be paid back with interest by a certain date. Interest charged by a gold dealer should be seen as another fee that will need to be accounted for when determining your overall rate of return. However, it may also be thought of as another way to obtain leverage.
Leverage allows you to buy assets using only a fraction of your account balance. For example, if a client was able to borrow $10 for every $1 in that person's account, that client would have 10:1 leverage.
It is important to consider that borrowing money may create a scenario in which you lose more than the value of the asset acquired with the funds.
In addition to no minimum account balance, there is no minimum purchase requirement. Therefore, investors can feel free to buy whatever best fits their investment criteria as opposed to trying to comply with dealer specifications.
As with Augusta Precious Metals, American Hartford Gold does have a buyback program. However, the company states on its website that there is no guarantee that it will act as a buyer.
In the event a deal is reached, a customer service representative will be on hand to help an investor through the process of selling existing holdings.
Although there are no account or investment minimums, American Hartford Gold does charge a $50 account creation fee as well as a $100 yearly maintenance fee.
In addition, sales taxes are applied to transactions involving customers in Texas as well as transactions involving foreign buyers. The sales tax is 1% for Texas customers and 5% for foreign buyers and sellers.
Another primary benefit to working with this company is that they work to provide custom solutions for their clients. Furthermore, they offer a variety of tools such as live price charts to help customers time their entries and exits and obtain a maximum return on investment.
Converting an existing IRA into a gold IRA may allow investors to create a hedge against inflation and political uncertainty. Gold IRAs are generally beneficial for investors of all ages who are interested in preserving their capital without losing out on the chance for price appreciation.
Depending on which company an investor chooses to work with, it may be possible to create an account and start buying gold for less than $100. However, those seeking to invest in gold will likely need at least $1,000 to make a purchase.
Remember to read our list of the Top Gold Companies.
>> Click HERE to read our Best Precious Metals IRA Companies list <<
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