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So, you’ve opened a gold IRA. Now what?
You can’t just set and forget your gold investments. To make the most of your gold IRA, you should monitor and adjust it regularly to meet your investment goals.
Read on to learn about how to monitor your gold IRA investments for maximum growth.
Why Is It Important To Monitor Your Gold IRA Investments Regularly?
Gold is a relatively stable investment, but it doesn’t offer guaranteed returns. When you purchase gold coins and gold bullion to hold in a gold IRA, you’re taking a risk, just like any other investment. Sometimes, the value of your investment will be lower; other times, it will be higher.
But instead of just riding the wave and hoping your gold investments will stabilize, you should actively monitor your gold IRA investments and make changes as necessary. You want your IRA to align sufficiently with your retirement goals at any given time, even when the spot price of gold is lower than average.
Doing this requires research, foresight, and planning on your part, so don’t make the mistake of thinking you can just coast by without incident.
Setting Clear Investment Goals and Objectives
The purpose of knowing how to monitor your gold IRA investments is to ensure your portfolio continually aligns with your investment goals. But your monitoring activities will be futile if you don’t know what those goals are.
Defining Your Financial Goals
What do you hope to get out of your gold IRA and your retirement portfolio as a whole?
Many investors will answer with the general goal of enjoying a stable retirement with plenty of funds to live off of. While this sounds great in theory, it’s an abstract idea. You must determine a monetary figure you’re striving for with your gold IRA to know whether you’re on track.
The general advice from retirement experts is to save:
- One year’s salary by age 30
- Three times your salary by age 40
- Six times your salary by age 50
- Eight times your salary by age 60
- Ten times your salary by age 67
These figures work for investors who predict they’ll live a more modest lifestyle once they retire. They may already have paid off certain assets, like their house and car, so they won’t have to worry about monthly payments.
But maybe you want to live an extravagant retirement, and ten times your salary won’t cut it. Think about the amount of money you want to live on each year of your retirement and adjust your goals accordingly.
Once you have an overall retirement goal in mind, determine how much your gold IRA should make for you to meet that goal.
Establishing Risk Tolerance and a Time Horizon
Gold is a relatively stable investment, so you won’t have to worry too much about huge fluctuations in value. But when looking at your gold IRA compared to the rest of your investments, consider how much risk you’re willing to tolerate. Investing in stable assets and mutual funds can reduce your risk of losing money on an investment while choosing more volatile products could provide better returns.
If you are going to choose more volatile investments, some investors would suggest doing so over a longer period so that the highs and lows can even out. If you’re already nearing retirement, keeping a good chunk of your retirement savings in a gold IRA could allow you to enjoy more stable growth than a relatively volatile investment product.
Tracking Gold Market Trends and Performance
The value of the gold products in your gold IRA will generally match market trends. The only differences arise with the types of gold you’re investing in. If you purchased gold coins with your IRA funds instead of gold bullion, for example, you’ll need to account for the value of the coins outside of their gold content.
Keeping an eye on gold market trends can help you monitor the performance of your gold IRA. You can see the live spot price of gold on various websites, such as NASDAQ. You can also view a graph of historical prices to easily compare the current value of your investment to previous months and years.
Utilizing Technology for Real-Time Monitoring
Emerging technologies can allow you to track your gold IRA investments in real-time. While you don’t necessarily need to know the value of your IRA at every moment of the day, these technologies can provide the most accurate information about your portfolio when you do check its value.
Gold Investment Software and Tracking Tools
Numerous online platforms and downloadable programs offer minute-by-minute updates about the spot price of gold and the specific gold products in your IRA. These programs can also send you alerts when major changes occur.
When determining which platform to download, consider whether you want to be able to track all of your investments in a single program or focus more on the gold and silver markets. You can find portfolio management software that supports a wide range of investments. Meanwhile, gold-specific platforms may have added features like options to buy and sell gold.
Reviewing Tax and Regulatory Compliance
Are you getting nervous about your gold IRA and wanting to cash out? Ensure you understand the tax rules and other requirements before doing so.
Understanding Tax Rules for Gold IRA Investments
It’s best to wait until you’re at least 59 and a half to cash out a gold IRA. At this point, you’ll only need to pay income taxes on your withdrawals.
If you cash out before age 59 and a half, you may also face a 28% capital gains tax on any profits you earn, which can significantly eat into your retirement savings. Your IRA custodian may also charge a 10% early withdrawal fee.
Finally, if you don’t start taking distributions from your gold IRA by age 72, you could face a 50% excise tax for every year you don’t withdraw the required amount.
Regularly Review Tax Rules and Regulations To Remain Compliant
IRS tax rules change frequently, and you don’t want to be caught off guard by a recent change when you go to cash out your investments. Stay on top of tax rules, even if you don’t plan to withdraw from your account for several years. Also, be aware of IRS regulations for gold IRAs, such as:
- Storing your gold in an approved depository
- Working with an IRS-approved custodian
- Not exceeding contribution limits ($6,500 annually in 2023, or $7,500 for those 50 and older)
Is It Essential To Rebalance and Adjust Your Gold IRA Portfolio Periodically?
Now that you know how to monitor your gold IRA investments, you can determine whether they’re meeting your retirement goals. If they’re not, you may need to rebalance your portfolio. This is the process of redistributing the assets in your retirement portfolio to better balance risk and potential returns.
For instance, maybe you want to reduce the risk in your portfolio by dedicating more funds to a gold IRA. Talk to your investment advisor about strategically rebalancing your portfolio.