What is a Platinum IRA?
A self-constructed and self-directed IRA allows investors to invest in precious metals, real estate, equities, etc. Precious metal IRAs allow investors to invest in Platinum, Silver, Gold, Palladium bullion, coin, and bar. A platinum IRA consists of bullion, proof coins, and bars of a particular metal: Platinum, for example, American Eagle, Australian Koala, the Canadian Maple Leaf, and others. Investors who do not wish to open a separate IRA or get into the hassle of finding custodians can invest in mutual funds or exchange-traded funds.
Precious metal IRAs allow an investor to buy metal of his choice and store it with a custodian chosen by him. Platinum IRAs also benefit the investor from a rollover, which means that an investor can transfer funds from his employee retirement fund to his accounts.
Platinum IRA, also known as a special metal IRA, is an investment strategy used by investors to diversify their portfolio and invest their undiluted, pre-tax funds and hedge market volatility and inflation risks.
Investing a part of your retirement investment portfolio according to your retirement plan in precious metals like platinum has a lot of benefits.
Unlike saving accounts common in America like 401K, special metal accounts are not denominated by the dollar, which means that the decline in the dollar's value would have no effect on the value of platinum that an investor has invested in his portfolio.
With the ongoing depreciation march of the dollar, investing in precious metals like platinum has been a strategy used by investors to protect their assets' values from depreciation and inflation. It has also been seen during previous recessions that the price of these precious metals is inversely proportional to the value of the dollar, which means that when the value of the dollar decreases, the value of metals like Gold, Platinum, and silver increases.
Another prominent benefit of investing a portion of investment funds in Platinum IRAs is that the investor might get capital gains in the long term for investing in an asset that safeguards the investor from inflation and devaluation. As predicted by financial analysts, precious metals like platinum are expected to increase in value in the upcoming decade as they are rare compared to silver and gold.
Investing in precious metal IRAs like a Platinum IRA means that one of the major issues is the plenty of costs. This includes the application fee for the account, which must be paid to the custodian of the IRA. The average expected application fee in the USA is $50. The custodians of the IRA may also charge transaction fees from the investors for buying and selling platinum or any other precious-metal-based on per transaction.
To keep the bought coins, bars, and bullion with an approved depository, investors of precious metal IRAs would also have to pay storage fees. Wiring fees of $25 would also have to be paid for every outgoing wire. Lastly, the custodian would charge annual account fees for maintaining the investor's investment account and overlooking administration and bookkeeping.
Platinum metal has numerous industrial applications as well. For example, they are used in the production of catalytic converters. This makes the value of platinum highly dependent on its demand in the market.
Holding physical metal means that the investor would not receive any cash flows until retirement, and the only benefit would be in the form of price gain at retirement.
No insurance cover
One of the major issues of coin investments and bullion in Platinum, Gold, Silver, and other precious metals is that they are not covered by insurance more than SIPC.
How to Move Platinum to Your IRA?
To hold a Platinum IRA, investors must follow the following steps:
Investors must look for IRA administrators or custodians who have the power to hold a special metal like Platinum in an IRA. Investors must perform their due diligence and take reviews of the custodian's customer service before selection to ensure that the administrator or custodian meets the IRS requirements and the investor's personal requirements.
Once the selection is done, an investor should open their self-directed individual retirement account with the custodian and fund it using any of the three options: rollover, transfer from an employer retirement plan, or annual contribution.
The investor must ensure that the money clearance has taken place and can start investing their funds into Platinum coins, bars, and bullion.
The custodian hired by the investor would then be responsible for monitoring the performance of the assets bought and placed in the IRA.
If an investor wants to invest in bullion, the custodian must be informed who would open an account in the name of the IRA and transfer funds in it. The investor may then buy the metals.
What to Look Out For In This Retirement Account
When investing in a Platinum IRA, an investor must ensure compliance with the IRS's rigorous requirements explaining the specific types of Platinum coins and bars that an investor can hold in their account in physical form within their special metal account. And for this, an investor must take investment advice from a tax consultant. IRS allows investors to keep physical platinum in their account, allowing investors to build up their funds for life after retirement on a tax-deferred or tax-free basis.
To hold platinum in a retirement fund, an investor must ensure that the platinum bars or coins are 99.95% pure. The Platinum bars and coins must also be deposited at a vault depository approved by IRS for protection.
Based on the minimum fineness requirement, some of the Platinum coins approved by the IRA include American Platinum Eagle bullion, American Platinum Eagle Coin, Australian Platinum Philharmonic Coin, and Austrian Platinum Philharmonic coin, Canadian Maple Leaf Platinum coins, etc.
Based on the minimum fineness requirement, some of the Platinum bars approved by IRA include Valcambi Platinum bars, Credit Suisse Platinum bars, PAMP Suisse Platinum bars, Credit Suisse Platinum bar, and Engelhard Platinum bars. An NYMEX-approved or COMEX-approved manufacturer must also manufacture these bars.
Investors investing in Platinum IRAs must also keep in mind that the value of platinum increases when there is monetary stability and growth in the economy, but since it also has numerous industrial applications, its value is affected by its demand. The next steps is to roll platinum into your IRA to keep a diverse retirement account.