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Is a silver IRA worth it?

For some investors, a silver IRA could be a worthwhile addition to their portfolio. Getty Images/iStockphoto

After an aggressive cycle of interest rate hikes, the Federal Reserve has now paused rates three consecutive times. Meanwhile, inflation rates are cooling but remain elevated due to substantial increases in 2021 and 2022. The combination of high prices and interest rates has put a squeeze on many Americans' budgets, many of whom face household expenses that exceed their income.

During such volatile economic environments, investors often turn to precious metals to diversify their portfolios and reduce risk. These metals are often seen as a hedge against inflation since their price can rise when the dollar's value is down. Additionally, the value of precious metals like gold and silver generally doesn't correlate directly with stocks and bonds.

One option that could help you diversify your portfolio and your retirement savings is a silver individual retirement account (IRA). Below, we'll dive deeper into the details of how silver IRAs work and when to invest them to determine if this tool can benefit you.

Start by exploring your silver IRA options online here.

What is a silver IRA?

A silver IRA is a retirement account that is similar to a traditional IRA. With both IRAs, you can typically fund your account with pre-tax dollars and grow your money tax-free, only paying taxes on your earnings when you begin to take distributions in retirement. Remember, however, the IRS requires precious metals to meet specific purity standards to be IRA eligible—silver must be 99.9% pure to protect its investment value.

Where a silver IRA differs is that it invests in silver bullion and other precious metals instead of assets like stocks and bonds. By adding a precious metal like silver to your retirement portfolio, you can potentially lower your risk level and hedge against inflation.

Silver IRAs come with an annual contribution limit of $7,000 in 2024, the same as traditional IRAs. Account holders over age 50 can add an additional $1,000 in "catch-up contributions."

Learn more about investing in silver here today.

When is a silver IRA worth investing in?

As precious metals are often considered a hedge against inflation, investing in a silver IRA could be advantageous when the value of the dollar is down. While no one knows for certain what will happen in 2024, geopolitical and economic factors could play a role. 

As Collin Plume, CEO of Noble Gold Investments, notes, "The uncertainty of the election, the BRICS nations starting to accept other currencies for trade, including oil, and the two wars we are fighting will devalue our dollar. Countries are becoming less dependent on the US, and many of these countries, like China, are replacing their dollar with precious metals."

Consider investing in a silver IRA when you anticipate a rising industrial demand. Silver is used in countless products and industries, such as water purifiers, medicinal treatments, cars and solar cells. According to an Oxford Economics and Silver Institute report, industrial demand for silver could increase by 46% between 2023 and 2033.

How do you invest in a silver IRA?

If you want to invest in a silver IRA, the IRS requires you or your spouse to have taxable income for the current tax year. This will allow you to be eligible. You'll also need to choose a custodian to hold your silver IRA. Shop and compare reputable precious metals IRA companies that can help you set up your IRA and invest in metals that meet IRS regulations.

Verify each precious metals company you're considering offers full insurance and secure storage in an IRS-approved depository. Also, confirm the company is registered with both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Once you've selected a precious metals company to work with, you can open and fund your account and begin purchasing silver or other precious metals like gold or palladium.

Other silver IRA considerations

While silver IRAs deliver numerous benefits, they also come with a degree of risk, which many fail to understand, says Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.

"The value of silver is often subject to its use and versatility as an industrial metal input in electronics, mirrors, solar panels, antimicrobial coatings, batteries, water purification and automotive applications," says Schulman. "It can be especially subject to economic and business cycles."

Schulman also warns, "Some of the largest risks come from dealing with unreputable dealers that may overcharge for their services." As such, it's imperative to run the SEC and FINRA checks mentioned above. Also, pay attention to customer reviews and ratings for any company you're considering and consult your financial advisor if necessary.

The bottom line

Adding a silver IRA to your retirement plans could help you diversify your portfolio and hedge against inflation. Bear in mind, however, precious metals can be volatile and don't generally outperform traditional assets like stocks and bonds over a long-term horizon. Consequently, experts often recommend capping your precious metal investments at 10%.

Consider the pros and cons of precious metal investing to help determine if a silver IRA suits your needs. Given the current state of the economy and projections for increased silver demand, a silver IRA investment could be a worthwhile option.

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