While you can include assets such as stocks and bonds in a traditional individual retirement account, with a self-directed IRA, you can invest in those items and also hold other types of assets, including gold, silver, and other physical precious metals, according to Kevin DeMeritt, founder and chairman of precious metals firm Lear Capital.
Some investors may appreciate that option, due to the steady performance precious metals have often shown during challenging economic periods.
“I can diversify in certain ways that will protect my portfolio and help me get through one of those economic cycles,” DeMeritt says. “Since the year 2000, gold has outproduced the stock market; this hedge against volatility has been doing extremely well. People have to think about [it like] an insurance policy — [maybe] 5%, 20% of their portfolio, [depending on] wherever they are in life — so they don’t get in a pickle if the economy goes upside down.”
Both self-directed and traditional IRAs offer tax benefits; contributions are made on a pretax basis, and taxes are deferred until the holder takes distributions. In a Roth self-directed IRA, contributions are made on a post-tax basis, which can basically result in tax-free withdrawals.
Precious Metal-Backed IRA Basics
Portfolio holders can have a significant amount of control over their asset allocation with a self-directed IRA. Instead of an account custodian, you can choose the asset mix you’d like the account to include, and you can alter it in the future.
In addition to items such as real estate, precious metals that have a certain composition can be held in a self-directed IRA. Gold coins, for instance, have to possess a fineness of 0.995 or greater; any silver needs to have a fineness of at least 0.999.
Some other stipulations apply. You’ll need to store precious metals that are part of a self-directed IRA in a recognized financial institution or IRS-approved nonbank trustee, for instance, to receive the related tax benefits.
Lear Capital arranges for its customers’ IRA-related purchases to be securely shipped to and stored at Delaware Depository, a state-chartered limited-purpose trust company whose operations are independently supervised and examined by the Delaware State Bank Commissioner, which makes the facility uniquely qualified to serve as a custodian for bullion held in an IRA in accordance with Internal Revenue Code Section 408(m).
In one of the Lear Capital reviews shared on the Trustpilot review platform, Kacey S. said she worked with the precious metal firm when she decided to move her investments from a stock-based IRA to a gold-backed one.
“My Lear [representative] helped me with every step in the process,” Kacey said. “He kept me up to date, responded quickly to my concerns and questions; he made it super easy.”
Glenda S. said she reached out to Lear Capital after several years of being frustrated with her 401(k) — including at one point being shocked to see she’d lost almost $3,000, even after freezing the account twice due to stock market losses, according to the review she posted on Trustpilot.
“I was done with this nightmare and heard that gold and silver were good investments!” Glenda said. “I contacted Lear Capital and voiced my frustration and secured my savings in silver — I am very pleased with their service and I look forward to a prosperous future with them!”
Michael G. also opted to acquire gold after focusing on investing in stocks.
“I’d never purchased gold before,” he said in one of the Lear Capital reviews shared on Google. “I’m happy I chose Lear. They were patient and helpful with my many questions. There are more options than you think.”
Gary D. also praised Lear Capital’s “exceptional and professional customer service.”
“My rep took the time to reach me about precious metals, using them in an IRA and suggesting allocations [that are] appropriate [for] both my investing style and asset base,” he wrote in a Google review of the company. “[I] highly recommended [Lear Capital].”
Becoming a Precious Metal Owner
Lear Capital representatives can help walk you though the steps involved in setting up a self-directed IRA, funding it and purchasing precious metals. All you need to do to get started is give the company a call, Kevin DeMeritt says.
“One of our representatives will get you the paperwork to transfer whatever portion of that IRA, 401(k), or 403(b) you would like to roll over to a physical precious metals IRA,” he says. “It’s a pretty easy process.”
Eric W. spoke to Lear Capital when he was considering purchasing physical precious metals.
“I wanted to diversify my portfolio, but was hesitant as I did not have much knowledge about the precious metals market,” he wrote in one of the Lear Capital reviews available on Google. “[The representative] at Lear Capital made this investment very easy to understand [and] made me feel confident that I was doing the right thing.”
James H. said he appreciated the information he received from the Lear Capital representative he spoke with.
“[He] has done an exceptional job of sharing his market knowledge with regard to opportunities to invest in precious metals as a hedge against inflation, bank failures and possible stock market swings,” James said in another Lear Capital review posted on Google.
As a self-described “newbie,” Susan G. said she felt getting acquainted with the precious metals market involved a significant learning curve.
In one of the Lear Capital reviews published on Trustpilot, Susan complimented the Lear Capital representative she spoke with, who she said provided insight without making her feel uncomfortable or uninformed.
“He followed up exactly as he indicated and contacted me every time he said that he would,” Susan said. “I have been in sales most of my life, and the old adage ‘You do business with people you like’ rings very true. When I choose to invest in more precious metals, I know who I will be contacting.”
