How to Hedge Against Inflation With an IRA

Inflation is a scary word for those saving for retirement. If inflation shifts too rapidly, you will witness your retirement funds dwindling down right before your eyes. Inflation has been steadily increasing year over year in the recent past, however, this does not mean that you should stop saving for retirement. There are ways to beat inflation by creating a very special type of IRA called a Self-Directed IRA.

Most people think of stocks, bonds and mutual funds when they think about IRAs, because those are traditional investments. Those same people don’t realize they could also be investing in gold, silver, rental properties and just about anything else as well. By getting into a self-directed IRA account, you can take some of your retirement savings and begin investing them in ways that will protect you from inflation.

Real estate is a great way to protect your money from inflation because homes retain their value even if monetary currency itself doesn’t. People need places to live and they are always going to be willing to pay a premium for them. By utilizing a custodian who will let you invest in real estate, you can start building out your retirement by renting out a home or business every month.

If you invest in real estate, you have to be very careful that you don’t rent to direct family members, you don’t use the house yourself, and that all of the rent goes back into your IRA account each month. Making any of these mistakes will lead to penalties from the IRS, which will definitely hurt your retirement savings.

If real estate isn’t your thing you can invest in precious metals instead. Gold has been one of the safest ways to hedge against inflation for as long as people have used it and there are plenty of custodians who don’t have a problem with you making this kind of investment. You will have to stay away from collectible coins made from precious metals. Also, all of the metal you purchase will have to be held by your custodian, because you can’t handle the assets yourself.

The nice thing about precious metals is that they retain their value even when whole economies collapse. Even if the United States government fell apart next year, you could take all of your precious metals and get your money back in another country without a problem.

Inflation is a scary thing but you can protect yourself from it with a little bit of careful planning of your investments. Investing in hard assets will help you protect your earnings and it’s a great way to diversify your income as well.

George Smith is President and CEO of Self-Directed LLC IRA. His company specializes in providing expert advice, guidance, and consulting for those interested in Self-Directed IRA’s (SDIRA). George is an accomplished businessman and experienced professional consultant dedicated to help individuals in achieving their personal and financial goals through SDIRA’s.

Is Your Retirement In Danger? Learn About An Investment That Could Protect You

Inflation, falling currencies, market meltdowns: Is your retirement protected?

Many financial experts speak of the importance of diversifying your investment portfolio. Will it be enough to own a mix of paper assets like stocks, bonds, mutual funds?

What will happen to your portfolio with the next meltdown comes? Many experts believe it’s not a matter of “if” but “when.” They remember 2008 too well when the average stock fund fell a whopping 38 percent and retirement accounts lost $2 trillion in 15 months. And many are warning that the next crash could be worse – much worse.

A Self-directed Gold or Roth Gold IRA

When comes to wealth protection in a market meltdown, one thing is certain: paper won’t cut it.

If you already own a traditional or Roth IRA then you already know of the importance of saving for retirement effectively and just how difficult and uncertain that can be. The tremors in the current global economy have already sent many investors running for more stable and safe stores for their money. Those looking for better diversification of their portfolios have more often turned to gold.

Why Would You Need Gold?

It’s been said that gold is money and everything else is credit. That’s because gold is a hard asset unlike any other. Gold has a history of 5,000 years of value retention. Compare it to the dollar: To buy what a dollar did in 1990 it takes a $1.82 in current dollars. Go back to 1970 and it takes $6.13! An ounce of gold, on the other hand, still holds the same purchasing power today as it did a hundred years ago and as it did during the days of the Roman Empire! That’s staying power like nothing else on earth.

Gold can work on protecting wealth whether it’s within a traditional IRA, a Roth IRA, or if you take direct physical delivery.

You Have a 401(k): Why Do You Need an IRA?

IRAs, like 401(k)s, are savings accounts designed to offer substantial tax breaks. But IRAs have added benefits in that they offer a far wider variety of investment choices. Many 401(k) plans allow for a very limited selection of choices. IRAs also allow you to open and close positions in different investments quite readily. A 401(k) plan’s ability to switch investments is very limited. For example, some plans may only let the investor make changes once every three months or so.

One important choice that a 401(k) doesn’t offer that an IRA does is precious metals. This type of IRA account is called a self-directed IRA.” With a self-directed gold or precious metals account you can buy coins or bullion. With a self-directed plan the investor is empowered to make their own investment decisions and add to the available investment options.

Plan for the Future With 401k Retirement Plans

When you finally decide to stop working, how will you support yourself? Don’t take a chance when it comes to you and your family’s future; get the right monetary advice to help you navigate your financial life after work. There are a number of 401k retirement plans available. Meet with a financial advisor to find the right path for you and your family; it is never too early to start planning for your future!

What are 401k retirement plans?

These pension accounts are there for your life after work. You can elect for a portion of your paycheck to be deposited into this account every pay period. These paycheck deductions occur before your taxes are withdrawn, so you don’t pay taxes on the money you save. If you have good employee benefits, your employer may also match your deposits every pay period. Once you decide to stop working, the balance of your account will be dispersed to you in installments. You will have to pay taxes on the money you receive from your account.

If I fall on hard times, can I draw money from these accounts?

Yes, you can withdraw your money, but if you are under the age of 59, there will most likely be a ten percent tax on this cash. Exceptions to this may apply in special cases, such as if you are buying a home for the first time. Depending on your account settings you may not be able to withdraw at all before the age of 59. It is important to meet with a financial advisor when determining your account settings so you can get the right account for your needs.

How do I establish one of these accounts?

All 401k retirement plans start with a written document. This document lays out the day-to-day operations for the specific account. If you have chosen to seek the guidance of a financial professional, they will draft this document for you to your specifications. You do not have to hire a financial advisor to pen this document or oversee your account, but they are a big help for the average worker. At this stage you will choose between some basic account types traditional, simple, or safe harbor.

Traditional accounts allow for the most flexibility. This choice allows for employee pre-tax deductions and employer matching either on a vesting schedule or fully. For employers this ensures that all your employees’ benefits are proportional to their positions.

Safe harbor choices are very similar to the traditional accounts, but employers must fully match employee contributions. The tax rules for these types of accounts are more complex at times, but overall they are nearly the same as the traditional types.

Simple accounts offer small businesses the chance to give their employees 401k retirement plans. These are similar to safe harbor accounts in that employers must fully match employee contributions, but these plans are only available to employers with fewer than 100 employees on the payroll.

If you are a business owner, there are a number of other steps you must take in completing the process of establishing 401k retirement plans for your employees. You have to arrange a trust fund for the assets of the accounts, develop a way to keep records of the fund’s activities, and you must provide your participants with the relevant information for their money.