Gold IRA or Roth IRA? Which One Could Save Your Retirement?

Kelly Felix
Updated
2015-01-12-GoldIRAorrothira.png
2015-01-12-GoldIRAorrothira.png

There are various types of retirement plans out there. If you were to believe the write-ups about the individual plans, they all seem like the perfect solution for you.

Unfortunately, times have changed and the common retirement plans, such as 401k, annuities andRoth IRAare no longer completely suitable because of the rate of inflation and because of the present laws.

You need to do a little bit of research yourself in terms of which plan is best for you. Two options that are particularly popular are thegold IRAand the Roth IRA. But which one of these two could actually save your retirement?

What is a Gold IRA?

A gold IRA is an investment in precious metals, with gold being the most popular metal. Basically, you store these precious metals in your Individual Retirement Account (IRA), rather than using paper-based assets like currency, stocks or bonds. It works in the same manner as a standard IRA, except for the assets stored within it, as such. All your assets are physical: gold bars or coins.

What is a Roth IRA?

A Roth IRA allows you to save money without having to pay taxes on it. This is because you fund it by using money that you have already paid taxes on. It grows depending on interest rates and other factors, but you won't have to pay taxes on that growth. Hence, when you withdraw your funds when you decide to retire, you will not have to pay taxes on it either.

Benefits of a Gold IRA

The first main benefit of the gold IRA is that it allows you to build a very diverse portfolio, particularly if you also look at other precious metals. Additionally, your investment is fully protected from things such as currency devaluation and inflation. Gold has been a precious commodity for over 5,000 years and it will never lose its value.

It is a physical type of commodity and it doesn't matter whether you are in this country or in deepest, darkest Peru, it will always have value. Furthermore, if you want to, you can diversify your portfolio even more and invest inassets like real estate.

Disadvantages of a Roth IRA

Looking at a Roth IRA, on the other hand, you will immediately notice that you can only invest in the stock market. This means you cannot build a truly diverse portfolio. Furthermore, you never know whether the government will suddenly decide to raise taxes, leaving you with far less money than you had expected.

Indeed, if you make any early distributions, you will get taxed on them straight away. Again, you don't know whether these taxes will be raised at any point either. And the biggest disadvantage is that you are not protected from inflation. If the value of the dollar drops, so does your investment.

5 Reasons You Should Consider a Gold IRA

There are a number of benefits of rolling over into a gold IRA.

1. You will be able to have your tax deferred. If you execute your rollover the right way, the transaction does get reported to the IRS, but it does not get taxed. This means you really get the most value for your money.

2. When you take out a gold IRA, you have much better and more diverse investment options. For one, you have the element of choice, as you get to decide what you invest in. And you can choose from different metals that you are interested in. Also, you can choose coins, bullion, bars or even jewelry if you so choose.

3. Although you have a more diverse portfolio, you have actually enrolled in a far more simpler product. You no longer have to manage different accounts or do other complex things just to know how your finances are doing. You may also have a 401K through your employer, for instance, and if you roll this over into your gold IRA, you will be able to manage it much easier. Plus, if you were to change jobs, this will not have any effect on your IRA.

4. It is very easy to roll over into a gold IRA. Simply speak to your financial adviser to get the ball rolling. It is even possible to do a roll over yourself online, which is even easier to complete if you feel confident about your understanding of the system.

5. The final benefit is found in the returns you can expect. When you invest in a gold IRA, the global financial market is almost irrelevant. No matter how currencies perform, you will always have something of value in your possession.

Which retirement option do you think is better?

San Antonio, Texas

<strong>Vibe:</strong> Old West; urban flair <strong>Mingle with the natives:</strong> By sharing a bike. The city's new bike share program lets you pedal all over town for just dollars a day. <strong>Sunny days per year:</strong> 227 <strong>Best daytime lark: </strong>El Mercado (which the city claims is the biggest Mexican marketplace outside Mexico) in Old Market Square. <strong>Median home price:</strong> $135,000 <strong>Local flavor: </strong>Brunch at the Mad Hatter's Tea House and Café, with a $10 fishbowl mimosa <strong>Impress friends and family with: </strong>The endless selection of restaurants and patio dining on the famous River Walk

Omaha, Nebraska

<strong>Vibe:</strong> Midwestern cozy with a high-tech spark <strong>Secret affordability sauce: </strong>Millionaires with a conscience. Thanks to civic-minded executives, private donations fund parks, arts, and sports <strong>Mingle with the natives: </strong>Hoist a local beer at Mr. Toad's, in the heart of the Old Market area <strong>Sunny days per year:</strong> 220 <strong>Best daytime lark:</strong> Seniors pay $12.50 at the world-class Henry Doorly Zoo; don't miss walking the rope bridge in the Rain Forest exhibit <strong>Median home price:</strong> $123,500 <strong>Local flavor:</strong> Wheatfields' baked goods rock; so does its senior menu, where a Grandmere Scramble or a Dusseldorf casserole goes for $8.50 <strong>Impress friends and family with:</strong> The area's numerous start-up companies, earning it the "Silicon Prairie" nickname

Grand Junction, Colorado

<strong>Vibe:</strong> Contemporary arts meet Western charm <strong>Secret affordability sauce:</strong> Two-thirds of the county land is public, making recreation a bargain; a recent 20 percent drop in housing prices <strong>Mingle with the natives at:</strong> The Rockslide Brewery downtown <strong>Sunny days per year:</strong> 260 <strong>Best daytime lark: </strong>Wander among the extensive (and quirky) outdoor sculptures <strong>Median home price:</strong> $159,800 <strong>Local flavor: </strong>Local vineyards get plenty of press, but make sure you snack on the region's impressive strawberries, sweet cherries, and peaches. (An outlying town is even named Fruita.) <strong>Impress friends and family with:</strong> The views of the Grand Valley

Pittsburgh, Pennsylvania

<strong>Vibe:</strong> Green not grimy, the city's 88 distinct neighborhoods create a European atmosphere <strong>Secret affordability sauce:</strong> Stable, diverse economy--since 2008, only Austin and Houston have added jobs faster <strong>Mingle with the natives at:</strong> Frick Park, in the city. In the summer, check out the Bowling Green (lessons are free for beginners) and in the winter, sled down the hill near Beechwood Boulevard <strong>Sunny days per year:</strong> 161 <strong>Best daytime lark: </strong>PNC Park, home of the Pirates, ranked as the No. 1 baseball field in the country by ESPN. Bleacher seats from $14 <strong>Median home price: </strong>$106,500 <strong>Local flavor:</strong> Eggs and kielbasa for breakfast at DeLuca's in the Strip district <strong>Impress your friends and family with: </strong>The view as you emerge from the Fort Pitt Tunnel. <em>The New York Times</em> once pronounced Pittsburgh "the only city with an entrance."

Gainesville, Florida

<strong>Vibe:</strong> Funky hippie meets world traveler. <strong>Secret affordability sauce:</strong> The country's sixth largest college--The University of Florida--fuels an economy more durable than most Southern cities. <strong>Mingle with the natives at:</strong> The Swamp, aka UF's Ben Hill Griffin Stadium. Tim Tebow isn't the only person to get fit running up and down the stairs here. Walk or run all you want--for free. <strong>Sunny days per year: </strong>242 <strong>Best daytime lark:</strong> At the Florida Museum of Natural History, seniors pay $9 to watch butterflies released into the Butterfly Rain Forest Exhibit <strong>Median home price:</strong> $125,500 <strong>Local flavor:</strong> A Cuban sandwich ($8.95) at Emiliano's Café, a pioneer in the pan-Latin food movement. <strong>Impress friends and family with:</strong> The dense urban canopy, where Northern hardwoods meet Southern tropics.