The Advantages of a Gold IRA Over a Gold ETF

We’ve already gone over why investing in a gold ETF isn’t a great idea. But if you want to invest in gold and realize that an ETF has drawbacks, how do you invest in gold? Investing in gold through a gold IRA is the clear choice, as it offers numerous advantages over ETFs.

1. Tax Advantages

The first advantage gold IRAs have is their tax-advantaged status. While it’s possible to invest in a gold ETF through an IRA or 401(k), many 401(k) plans don’t offer that ability to invest in gold ETFs. That means that you’ll have to invest in a gold ETF through a normal brokerage account. You’ll use post-tax dollars to invest and then have to pay taxes on distributions and capital gains.

By contrast, a gold IRA allows you to use pre-tax dollars, either contributions from your salary or existing tax-advantaged assets such as from a 401(k), 403(b), or TSP account. Then your gains accumulate tax-free and you don’t pay taxes until you take a distribution, just like with a traditional IRA. That tax-free growth means that a gold IRA can offer significantly more asset growth than a gold ETF.

2. You Own Gold

Unlike a gold ETF, in which you’re only buying shares in a fund that owns gold, with a gold IRA you actually own gold coins and bars. You as the IRA owner decide which gold coins or bars you buy so that your investment can be personalized to suit your needs.

Your physical gold investment is held with a custodian who keeps the gold safe so that you don’t have to worry. And when you decide to take a distribution, you can take it either in cash or in gold.

3. No Custodial Issues

Because your gold is held by a custodian, you don’t have to worry that your gold is loaned out to third parties. It’s held in a secure vault, not commingled with anyone else’s gold, and is available for you to take delivery of when you decide to take a distribution.

For all these reasons and many more, gold IRAs are a far better choice than investing in a gold ETF. Gold ETFs are paper gold, a derivative of actual gold. Between the custodial issues, share inflation, and fees, gold ETFs have numerous drawbacks. By investing in actual physical gold through a gold IRA, you can overcome all those disadvantages and put gold to work safeguarding your vital retirement savings.