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Gold IRA pros and cons to know

Gold IRAs offer attractive tax benefits, but they also have some potential drawbacks worth considering. Creativ Studio Heinemann

In an economic environment plagued by high inflation, rising interest rates and banking uncertainty, many investors are looking for ways to protect their money. Investments like stocks can deliver significant returns, but they can also deliver significant losses. That's why it's important to have a mix of asset classes in your portfolio to balance risk and reward.

One way to add stability to your portfolio is by investing in gold. There are many ways to invest in gold, including gold IRAs. Like regular IRAs, gold IRAs are retirement accounts that offer attractive tax benefits, but they also have some potential drawbacks worth considering. That's what we'll explore in this article.

Begin exploring your gold IRA options by requesting a free information kit.

Gold IRA pros and cons

Consider these advantages and disadvantages when deciding whether to invest in a gold IRA.


Gold IRAs can be a valuable investment for many reasons, including:

  • Tax advantages: Depending on the type of gold IRA you open, you'll enjoy tax benefits either when you contribute money or when you withdraw it. For traditional IRAs and Simple Employee Pension (SEP) IRAs, contributions are not taxed, but withdrawals are. For Roth IRAs, contributions are taxed but withdrawals are not. In addition, traditional and SEP IRA contributions are tax-deductible.
  • Hedge against inflation: Because gold prices tend to rise when the value of the dollar drops, it's a good hedge against inflation. Over the long term, gold values tend to ride out the storm of interest rate fluctuations to deliver solid returns.
  • Safe haven: When the economy is in turmoil, gold prices tend to hold steady, unlike investments such as stocks and bonds. This makes gold IRAs a safe place to keep your money no matter what the market is doing. And for something as crucial as retirement savings, this safety is essential.
  • Diversification: A successful investment portfolio contains high-risk, high-reward and more conservative assets, which may not earn high returns but also won't suffer extreme losses. Gold is one of the latter assets. You won't see dazzling returns from it, but it helps balance out the risk of more volatile assets.


While gold IRAs offer plenty of positives, they also have some potential negatives to keep in mind.

  • Relatively low returns: The flip side of gold's stability is that its returns aren't as high as riskier assets can be. For this reason, you should include a variety of assets in your portfolio for the best outcome.
  • Contribution limits: All gold IRAs limit how much you can contribute annually. For traditional and Roth IRAs, that limit is $6,500 (or $7,500 if you're 50 or older) for the tax year 2023. For SEP IRAs, the limit is up to 25% of self-employed income or $66,000 (whichever is greater).
  • Early withdrawal penalties: Traditional and SEP IRAs penalize you if you withdraw funds before age 59 ½. You'll pay taxes on any early withdrawal, plus a 10% penalty (this isn't the case for Roth IRAs). If you want an investment with better liquidity, you might be better served by buying physical gold, which you can sell quickly for cash.
  • No dividends: Some investments, such as stocks, regularly give shareholders of a company a portion of the company's profits. These payments are known as dividends, and they can provide a source of passive income. If you invest in gold IRAs, you won't receive dividends. Other features of gold IRAs could offset this for you, but it's worth considering.
  • Fees: You may incur account setup fees when you open a gold IRA, as well as ongoing maintenance fees, storage fees and custodial fees. This can eat into your earnings.

Request a free information kit today to learn about investing in a gold IRA.

The bottom line

Gold IRAs provide an inflation hedge, portfolio diversification and tax benefits. But, as with any financial product, they also have drawbacks, including contribution limits and low returns compared to other investments. Consult a financial advisor for advice on the best option for your situation.

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