Disclaimer: We are reader supported. We may be compensated from the links in this post, if you use products or services based on our expert recommendations. Please read our Advertising Disclosure.
If you're investing for retirement, then you're probably being very thorough. The advantage is that you should have years and even decades to build up your portfolio.
On the other hand, you need to make sure you take advantage of every opportunity you can. Your research has probably opened your eyes to the power of precious metals for retirement investing, and gold is usually the top option.
It is a robust asset when held for a long time in a self-directed IRA. However, you might have discovered that silver is an option. Whether you do a silver IRA in place of gold or in addition to it, you need to know what IRA-eligible silver is.
While all silver products might have benefits and value, you can't put anything silver you want into your silver IRA. There are limitations that you need to know.
Before we get started:
We understand how difficult it is to pick a company that you can trust with your hard earned savings. That's why we create informative and useful information to give you as much knowledge as possible to make the right decision.
We created a list of our highest recommended investment companies, to make comparing and choosing the company best suited to your needs as easy as possible.
Or...
Get a FREE Gold Investing Packet from our #1 recommendation by clicking the button below:
Protect Your Savings - Secure Your Financial Future Today!
What Kinds of Silver are Approved for Your Self-Directed IRA?
If you're already familiar with a gold IRA, then you know what a silver IRA is.
It's an individual retirement account with tax benefits, but you choose the specific physical precious metal products that you invest in. In this case, you just focus on silver instead of gold.
Because there are tax advantages, there are also rules. These are laid out by the IRS. The government has specific criteria for what kinds of silver products you can include in a precious metal IRA.
IRA-eligible silver can take the form of rounds, bars, and coins. The minimum fineness is 0.999%. The products must be made by either a government mint or a refiner, manufacturer, or assayer that the IRS approves of.
Some silver bars meet the criteria if you don't want to get too involved with details and choices regarding coins. Johnson Matthey and the Royal Canadian Mint are two potential sources of IRA-eligible silver bars, but there are others.
However, many investors like looking into coins as well. American Eagle bullion coins are a good place to start.
The Silver American Eagle has become a national classic, and the larger American the Beautiful silver coin is also totally backed by the federal government for purity, weight, and silver content.
Either one of these might be a good place to start your silver shopping. American Eagle-proof coins are also IRA-eligible. These particular coins have advantages more than just their silver content.
For one, they have a lower mintage than their bullion cousins. Australian Kookaburra coins can be different designs every single year, meaning there are a growing number of options as time goes on.
The silver Kookaburras come minted in four different weights. All of them are IRA-eligible.
You might know about the Austrian Gold Philharmonic coin that made its debut in 2008. Since then, a silver counterpart of the same coin has been released. It's an outstanding investment piece for many buyers.
Canadian Maple Leaf coins are unique due to their level of silver content. The .9999% purity is among the highest in the world. Investors flock to this for the high value.
Mexican Silver Libertad Coins come in 1-oz. varieties. They're often produced at La Casa de Moneda de Mexico. That's the oldest mint in either North or South America.
What Kind of Silver Is Not IRA Approved?
As you can see, many silver products are self-directed IRA eligible. Hopefully, your account broker or custodian will make it obvious which products you can buy and which ones you can't.
However, many silver products are not possible inclusions to your account. For starters, you can include silver that you own already. The IRS can't possibly verify that the silver you already own meets its requirements.
That's in terms of fineness and also the source of manufacturing or minting. Another problem with silver you already own is that it's already paid for.
Many investors doing a silver IRA use rollover funds from other tax-advantaged retirement accounts funded with pre-tax income for maximum benefit. This can't always happen with silver you already own.
Silver that's certified by any third-party grading service also can't be included. The approved manufacture, mint, or assayer list is in place to protect investors with a consistent level of quality.
Silver bullion purity standards around the world are variable and not always equal.
Collectibles and rare coins are not permitted in any precious metals IRA, be it silver, gold, platinum, or palladium.
This rule is in place to protect investors from the speculative nature of market values in such pieces, where the prices might be impacted much more by aesthetic values and desirability than the spot price of the actual metals involved.
Jewelry is restricted for the same reasons.
Why Is Silver a Good Retirement Investment?
Gold is something many investors flock to for several reasons. For starters, it's considered to be an alternative asset class. Diversification into it means you have a part of your portfolio that moves differently than stocks, bonds, and funds do.
Silver does a lot of the same thing. It retains portfolio value well during periods of high or rising inflation. It can also be a great hedge against market downturns and economic instability.
However, silver might offer a few perks that gold doesn't. Knowing this means that you might decide to invest in silver and gold. You might even choose to invest in silver over gold.
Silver is more closely tied to global economics. Half of all silver production every year winds up getting used in industrial and technological applications. These range from tablets and smartphones to solar panels and electrical systems in automobiles.
Given that, silver values tend to take off when economies grow. Gold's purposes, beyond investment, tend to be limited to jewelry. However, gold is less impacted by economic decline, given its lower exposure to industrial applications.
Silver is often cheaper than gold. On a per-ounce basis, this is usually the case. That means it might be more accessible to investors who are just getting into precious metals and don't have the massive funds required to be a player in the gold market.
As silver is a tangible asset, it retains its value better than paper-based assets. Consider how quickly stocks, currencies, bonds, and funds might lose value overnight. A physical investment isn't nearly as likely to see this happen.
Silver also grows in value over the long run, and that's what retirement investing is all about. Silver has been minted and used for thousands of years.
In the first two decades of this millennium, it grew in value by nearly 500%, and its yearly growth is often double digits and ahead of the growth of gold.
If there's one downside you should be aware of, it's the price volatility. Silver prices can change two or even three times as often as gold daily.
If you pay too much attention to this in the short term, it can be a source of stress.
Starting Your Silver IRA
To get a silver IRA going, you have to first find a broker or custodian for your account. Even if you have a mainstream IRA set up through a major financial services firm, using them for a silver IRA might not be a great idea.
Many won't offer alternative asset investment options, and the ones that do might be truly specialized in them. There are dozens of precious metal IRA brokers you can choose from, however.
They can help you set your IRA up in very short order when you reach out to them. You'll have to choose one based on several different factors.
As with any business selection, their customer service ratings should be one of the first things you look at. Also, look at their fee structure.
You might have to pay an account creation fee, and there will be annual fees for account management and physical storage.
Also, pay attention to their minimum investment levels. They can range from just a few thousand bucks to $50,000. This will hit you differently based on whether you're new to retirement investing or have been building your portfolio for a while.
How much you want to invest is up to you. You can do it using income and making contributions within the annual IRA limits. You can also do a rollover from an existing IRA or 401k plan.
The IRS does mandate vault or depository storage for SDIRA precious metals of all kinds. You'll have options about which storage facility to use in most cases. You might even get to choose between mixed or segregated storage.
You don't get a choice in whether or not you use storage. You can't take personal ownership of your precious metals until you make a withdrawal or distribution. If you do that before age 59 1/2, then you'll be hit with a 10% tax penalty.
Home storage carries risks. Theft and loss of your precious metals is the biggest concern. Having your metals property insured is also another consideration.
When the time comes to take a distribution, you can have your metals shipped to you then. However, you might also choose to have your custodian or broker buy the metals back so you can have cash rather than the silver itself.
Key Takeaways
Silver is another precious metal other than gold with potential retirement investment advantages.
You can create a silver IRA and include eligible silver products, but you can't put anything and everything silver into your account.
Playing by the rules means taking advantage of serious tax breaks on top of the benefits of investing in silver and precious metals.
I started BMOGAM Viewpoints as a way to compile all my views on investing in one place. I own my home, have some real estate, and own a few stocks like most people, but what really drives my interest in investing is I have a strong love of precious metals, especially gold.
