How a Gold-Backed IRA Helps Diversify Retirement Portfolios

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At Accuplan Benefits Services, we love talking about how you can diversify your retirement portfolio to create a better retirement portfolio. Most financial planners and retirement specialists would agree that a diversified portfolio is an intelligent way to go about investing for the long haul.

We at Accuplan focus on self-directed IRAs. We want to talk about how you can go about investing in gold or silver to diversify your retirement portfolio with a self-directed IRA. Investing in gold with your IRA is often referred to as a gold-backed IRA or gold IRA.

Diversification and Steady Returns

Gold can play a vital role in diversifying your retirement portfolio. One of the most effective methods for identifying a good diversification tactic/asset is when there is no correlation between the assets held in a portfolio. The correlation between gold and stocks is almost zero. Because of this, gold is a great way to diversify because it can protect returns while reducing volatility.

Diversification and Steady Returns

An article by Investopedia states that “from 1990 to 2020, the price of gold increased by around 360%. Over the same period, the Dow Jones Industrial Average gained 991%.

Looking at the 15 years from 2005 to 2020, the price of gold has increased by 330%, roughly the same as the 30 years. Over the same period, the Dow Jones Industrial Average rose by only 153%.”

Safety in Uncertain Times

Gold is often considered a safe investment, especially during geopolitical crises or political instability. Usually, during these times, the value of gold rises. Gold investors often see a gold-backed IRA as insurance for their retirement portfolio, insurance against market failure, or times of war.

Inflation Security

Typically, gold rises during inflationary periods, and as such, consumer prices increase, and while the cost of living goes up, so does the value of gold. When gold rises during inflationary periods, it can be a great way to help protect your purchasing power. If you feel like inflation is on the horizon, then a gold-backed IRA can be an invaluable method to safeguard investments.

Note that many of these same principles with gold apply to silver and other precious metals.

If you are looking for a gold-backed IRA or are interested in different precious metals within an IRA, contact us today. We can help you set up an account and invest in the metal of your choice.