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Are Investment Retirement Accounts Risky?

Updated: Apr 19, 2019

When people do look to use long-term investment avenues, the need to keep the risks to a minimum is significant. There is a popular misconception that it is the riskiest assets that would yield the most return. This would have been true in the old days when instruments like the derivatives were not that prevalent and in most instances than an asset class meant something tangible than virtual. When it comes to risk, it is the more short-term investment horizon that gets to be the riskiest and the chances of taking on a loss become all the more minimal as the time frame to maturity increases.


Managing risks using Gold IRA


The best return for the capital deployed is when the risks are kept to just the right levels to bring on the best performance. It is here that a feature like the IRA comes to play. One of the most attractive features of an investment account is that does not attract any tax on capital appreciation. It is when the asset is liquidated that the provisions of capital gains come into the picture. Thus the Gold IRA accounts are meant to provide a tax-free method of participating in the appreciation of gold prices in the bullion market.


For those investing class who are often prone to paying a substantial part of their incomes as taxes, the retirement accounts provide an excellent avenue to spread out the risks. But here it must be stressed that the aims of the investor should be matched to the possible risk profile and eventual return for the sum of money being invested.


The issue of fraudulent transactions


When the money of any form is involved, there is always be those who would want to make a tidy sum without much of an effort. So it comes as a little surprise that there would be those folks who would seek to take the uninformed and gullible for a ride. Like any other investment avenue, the Gold IRA must be treated with the same level of caution as would be there another type of instrument.


What sets apart an IRA from an Exchange Traded Fund is that the ETF has virtual holding and never a physical stock of the commodity. Thus the Gold IRA would have holdings of physical gold, and this is when issues of security come to play. Often with financial bodies, there is not much scope for verifying the stock of gold being held in trust. So it is entirely possible to attribute a particular gold holding to another investor when there is no sure way to ensuring that it does belong to the said person.


Regulatory Norms


One of the most powerful features of modern-day capital markets is the active role that regulation plays in the field. Thus it is never that the investor is left in the lurch and there are sufficient safeguards to keep everyone involved in the issue of IRA facility protected and safe.

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