If you are wondering why you should convert your 401(k) to physical gold, then this article will provide you with the reasons why you should.
But before we do that, we will look at what a 401(k) is, and then explain what a rollover is, before going to the crux of this article.
Let’s get started…
What is a 401(K)?
This refers to a type of retirement plan that is sponsored by an employer that allows employees to save money as they work with the company which they can make use of in their golden years.
The money saved is free of tax thereby allowing you to save without remitting this portion of your savings to the government. Visit https://www.irs.gov/businesses/small-businesses-self-employed/what-is-taxable-and-nontaxable-income to find out what income is taxable and those that are nontaxable. Although you might get a smaller paycheck, however, when the investment is due for withdrawal, it will be worth it.
In some cases, the employer will match the amount the employees save. Also, they can add more to the plan for each savings made. This money can then be invested by the company thereby increasing the overall returns.
They can also help you select various investments that will bring more returns. When you want to select an investment, go for those funds with diverse growth potentials such as bond funds, large and small-cap funds.
Interestingly, this retirement plan allows you to diversify into other investment opportunities. This is why you can easily rollover your funds to physical gold.
Not that we have mentioned it, let us explain what a rollover is.
What a Rollover is
A rollover occurs when an individual transfers or converts the holdings or funds within a particular retirement plan into a different retirement plan without incurring tax charges.
When this occurs, it could mean that the individual has reinvested the initial funds from the security that has matured into another security that could be the same type or a similar one. The money is not withdrawn out of the original account but sent directly to the new investment account.
One of the accounts you can rollover your 401(K) into is either the regular or Roth IRA. Click here to learn the difference between regular and Roth IRA. This can occur when you quit your job but still want your savings to remain in a single location.
You can equally choose to rollover your savings into a gold IRA. This is the best way to get your hands on physical gold; well not literally though since your custodians will be responsible for keeping possession of the commodity.
Also, if you quit the company, you could rollover the funds into a self-directed IRA. After the funds are in the account, then you can purchase any precious metal of your choice.
Benefits of Rolling Over your 401(k) into Gold
The following are the benefits of rolling over your 401(k) to gold:
1. Gold isn’t Affected Negatively by Inflation
Very few commodities retain their value during inflation and aurum is such a commodity. In fact, during inflation, the value of this precious metal tends to increase. Hence, when you convert 401k to gold, you won’t lose the value of your investment during inflation.
2. Risk is lowered
If you are seeking a method whereby your assets can be protected, then you should invest in aurum. Risk is also lowered when you choose this investment method.
Experts have suggested that investing about 6% to 25% is an excellent strategy. Some experts have said that the higher your investment percentage, the better protected you are.
3. Allows you to Diversify
Gold serves as a diversification commodity. It serves as a hedge and a haven. The fact that it differs from most other forms of investments places it as an important commodity everyone should possess.
4. You are insured
If an economic downturn occurs, aurum will protect your investment, unlike other forms. This has been the case all through history as gold’s price will always remain constant and even go up no matter how bad the overall economy gets.
The above are a few reasons why you should convert 401k to physical gold.
Conclusion
We do hope you’ve found the information above useful. The key to a lasting investment portfolio is often having the right information. Make use of what you’ve learnt here and other widely available resources to build a portfolio that will deliver high returns.