Gold bars vs. gold IRA vs. gold ETF: Experts pick the best option
There are many reasons you might want to buy gold — particularly in today's economic climate. For one, it's long been considered a smart hedge against inflation, which has remained stubbornly high for the last two years. It's also a good portfolio diversifier, allowing you to spread your wealth across different asset classes and protecting it in the event of a downturn in other sectors you're invested in.
Still, there are lots of ways to buy gold. You can purchase physical gold bars and bullion, or you can invest in gold ETFs. You can even open a gold IRA and use it to save for retirement. Not sure which gold investment is right for your needs? We asked some experts to weigh in.
Start exploring your gold investing options here today and take advantage of this unique opportunity.
Gold bars vs. gold IRA vs. gold ETF: What the experts think
We asked a few experts to weigh in on these three gold investing choices. Here's what they think about each.
Gold bars
The old standard is to purchase physical gold, by way of gold bars, coins and bullion. This can be a good choice if you want to keep your investment liquid, as you can easily sell the gold at any time and turn it into cash. It's also easier and more private than other options.
"When you own physical gold, you don't have to rely on any financial institution or counterparty to fulfill your investment," says Alex Ebkarian, co-founder of Allegiance Gold. "Transactions can be relatively discreet."
The big downside is that owning physical gold won't result in income — as dividend-yielding gold stocks might — and that there are often "transaction costs, dealer markups, and assay fees," according to Ebkarian.
You will also have costs associated with transporting and storing the gold bars or coins. This might mean renting a safety deposit box or installing a safe in your home.
Finally, physical gold comes with the potential risk of fraud. As Ebkarian explains, "There's a risk of encountering counterfeit gold bars and coins, especially if you purchase them from unverified sources. Do your due diligence. Ensure authenticity."
Learn more about investing in gold bars and coins here now.
Gold IRAs
Another option is a gold IRA, which is a wise move if you're looking to use gold to grow your retirement savings.
"A gold IRA can act as a form of insurance for your retirement savings," Ebkarian says. "If financial markets suffer a significant downturn, the price of gold may rise which would help preserve the value of your retirement accounts."
There also may be tax benefits to having a gold IRA. Depending on what type of account you have, you may enjoy tax-deferred growth of your money or, in retirement, tax-free withdrawals.
The major drawback is that IRAs have age limits. If you withdraw money from an IRA before you're 59.5, you'll face a 10% penalty.
Gold IRAs also require more set-up, have maintenance and storage fees, and you have to hand the reins over to a custodian (you can't just open and manage the account yourself).
"Managing a gold IRA can involve a few more steps to set up than a traditional retirement account," Ebkarian says. "You will need to find a custodian who specializes in precious metals."
Gold ETFs
Gold ETFs are a smart option if you want to invest in gold but not hold it physically. There is no storage or transport involved, there's no potential counterfeit risk, and you can spread your investment across the wider gold sector. These also tend to be fairly liquid.
"You can purchase and sell them easily," says Collin Plume, founder of Noble Gold Investments. "They prove to be good investment options for short-term and medium-term investors."
Gold ETFs come with maintenance fees and transaction fees, though, and you could owe capital gains taxes on your profits. Finally, there's also risk that your investment will lose value. In fact, Plume actually calls gold ETFs "the riskiest" of all three gold-buying strategies.
"Your investment depends on the company and not gold itself," Plume says. "Gold prices could be going up, but if the company you are investing in fails, your investment fails."
Learn more about gold bars, gold IRAs and gold ETFs here to determine which is best for you.
Which gold investment is best?
The right gold investment choice really depends on your goals and timeline. If you're willing to take on some risk in exchange for potential growth, a gold ETF may be a good option. It also might be smart if you want more liquidity and easier access to your funds. If you're thinking long-term and want a safer bet, a gold IRA may be the best option.
"It's all about perspective and objective," Plume says. "If you're investing in gold because you want a hedge so that when you retire, you have that one asset that will go against your traditional assets, then it's better to have it in an IRA. If you want the security of knowing you will have gold no matter what, then it's good to get it delivered to you."
