Is transfering 401k to gold IRA a good idea ?

S

stynjar

New Member
Apparently the government allows you to transfer funds from your 401k to a gold IRA without penalties. People I know are doing this, they seem very pessimistic about the stock market.


I am not a savvy investor, all I know is that my 401k is in stock and bonds. What are your thoughts on this ?Are any members here switching to gold ?
 

Personally, I don't think gold is a good investment. If you are buying gold coins you will need a safe place to store them. You don't get dividends from gold either. My choice is to invest most of my money in stocks that pay good dividends.
 
You are right dividends seem to be more logical investment. But this fear talk on the declining dollar, national debt and overvalued stock market makes me anxious. People I know talk of another crash but I dont want to believe that.
 

The time to buy Gold and Silver is NOT when you see an increase in TV ads, etc., touting the benefits of owning precious metals. Those ads are coming from those who have invested in these metals, and see no meaningful rise in the future, and they want to dump their holdings so as to invest in something that has better growth potential. Gold/Silver have made huge gains during times of national crisis....such as the meltdown of 2007/2008, and someone who bought these metals, prior, made a nice profit...but those who bought near the peak may have to wait several years....until the next government fiasco...to recapture their purchase price.
 
You need to educate yourself. Taking advice on a public forum is worth precisely what you paid for it, LOL. But what the heck, here's my thoughts.

FYI, there is NEVER a charge or penalty for moving account assets from one i/b to another – except there is a standard $100/acct charge for CLOSING a retirement account. Everybody charges this; it's a paperwork and handling fee. The IRS tracks retirement asset holdings among institutions as a matter of course.

There is nothing wrong with a small allocation - this means under 5% - in any risky asset class. And yes, in fact, gold and other metals are considered a "high risk" asset.

A 401k or IRA is a personal investment account in which you are assuming all the risk. This is the difference between these and the traditional pension.

Are you at the mercy of the stock market? Yes. If you are in gold, are you safe from swings? NO. NO. NO. In 2016 gold finally took an upturn after 3 successive years of losses. It rose dramatically until mid-year – and then it crashed down. It ended with a gain, but that gain was cut by more than two–thirds by year end.

A very illustrative chart courtesy of http://www.kitco.com/commentaries/2017-01-06/The-Gold-Market-in-2016.html:
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What you would be doing in transferring to a Gold IRA is to put all your eggs into one uncertain basket. To be 100% in metals is no different than if you put 100% in a Venezuelan junk bond because it promises a 30% dividend. Or 100% of your funds into a single stock, like Apple or GM.

If you do not remember what happened to all those poor Enron employees who were left with worthless stock, look it up. You would be doing precisely the same kind of thing.

Pay attention to those who point out there are no dividends on gold. Have you investigated how much the annual fees are on this "gold IRA"? Nobody stores bullion for free; there are sizable handling and exchange charges on it.

Here are the Historical Annual Closing Gold Prices: Last 5 Years
Year
Close
% change
2016
$1,145.00
8%
2015
$1,060.00
-11.6 %
2014
$1,199.25
-.4%
2013
$1,204.50
- 27.6%
2012
$1,664.00
8.68%
 
if you are going to hold an asset class , to do much good you need enough of the asset to matter or don't bother . a 5% position is like peeing in the ocean if you have a large equity position .

the value in gold in a portfolio is it can provide a positive real return floor for the portfolio when stocks are falling .

98% of all the stock market drops since the late 1970's had gold holding the line on portfolio damage . but you need to own enough of it to support the portfolio .

how much you need depends on your stock allocation .


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interesting enough if we look at a total market portfolio ,since 1970, a classic 60/40 mix vs a mix with 20% gold . the portfolio with the 20% in gold beat the 60/40 in gains , but it also had the best risk vs rewards of all 3 .

it had the least losing years as well as the smallest swings .

that is not because gold is a good investment , it is because gold tends to hold a positive real return in down markets
60/40
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20% gold ,long term treasuries ,cash, large caps ,small cap value
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My (conservative) financial planner has for some time been taking positions in so-called alternative investments, including gold stocks. It's a way to generate better returns when a traditional mix of stocks and bonds just isn't performing as well.
 
gold stocks are not the same as gold.THEY ARE STOCKS FIRST AND A PLAY ON GOLD 2ND . 2008 saw gold stocks plunge while gold was up .

gold stocks are subject to strikes ,corporate earnings , changes in mgmt , political issues and the general direction of stocks .

in my opinion gold stocks are fine if you want to speculate in the direction of gold , but a poor proxy for protecting a portfolio when needed .

gold in a portfolio is not for profits as much as setting that floor in the drops .
 
It's about getting a degree of real diversification with a % of real assets vs. fake diversification with only paper assets, not either/or, or all-or-nothing. So gold stocks are not it at all and are just more paper, but only real officially IRA-approved physical gold bullion (a "gold IRA" can also include silver, platinum and palladium if preferred). It's ironic and perhaps not many know, but one of the biggest paper asset stock gurus of them all, Jim Cramer, has been an ardent proponent of holding a % of one's wealth in real gold for many years now. He used to very emphatically even advocate holding 20% though he has modified that in recent years. A gold IRA is certainly one of the best ways to diversify in this way and includes the inherent tax advantages. A good starting point is getting the free guide download for that through https://egoldira.com.
 
if you buy gold it should be used within a portfolio strategy , not bought in isolation ... gold can be a powerful mover when it has it's day in the sun so you need guidelines for rebalancing the portfolio ...

take the 2000's as an example .. holding a static lump of gold when gold soared would have you riding it up and riding it down pretty much going no where .

but a plan for rebalancing gold in to equities since they were flat for so long would have had you taking those nice gains and buying equities as you sold what went up and bought what went no where .

that is a totally different outcome then tracking gold in isolation .

this is why i say do not look at gold alone . it needs to work in conjunction with rebalancing in a portfolio or you ride it up and ride it down with no gain .


so lets look :

------equities----- gold

2006---15.13%-----22.33

2007---5.26%-----30.95%

2008---minus 36.78%---up 5.45%

2009---27.06%------ 23.46%

2010--16.15%-----27.94%

2011---1.55%-----5.66%

2012---15.98%----8.37%

2013---32.67%---- minus 27.94%

2014---13.01%----minus .43%

2015--.96% --------minus 11.71%

2016---12.59%----8.88%

2017---21.23%---11.56%

2018 . minus 5.31----minus 1.94% ....

so there is a big difference in the gains and additional equities you bought with the gains in gold as opposed to just seeing gold go up and then ride it back down with no profits pulled out and put in the next horses in the race which were equities.

so when we talk about the reasons of owning gold , it has little to do with what you see just letting gold sit static forever . it is a different animal in a risk parity structure .
 
fmdog44 said:
All depends on what your goals are. Jim Cramer like no more than 10% in any portfolio and that is through the GLD fund.
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Cramer’s track record is on par with a coin toss, so Cramer is an entertainer not a researcher ... but research shows there are optimum levels of gold and it depends on the portfolio allocation to equities ..you can be sure 10% will not accomplish much in a portfolio that is 60% equity
 
Blah, blah, blah. If you're a commodities trader and/or an individual who can trade large quantities of precious metals, gold may make you some money. Otherwise, buy a few coins and tell everyone you've invested in gold, if that'll make you feel like you're impressing yourself and everyone else. If none of the above applies, don't bother buying gold.
 
mathjak107 said:
Cramer’s track record is on par with a coin toss, so Cramer is an entertainer not a researcher ... but research shows there are optimum levels of gold and it depends on the portfolio allocation to equities ..you can be sure 10% will not accomplish much in a portfolio that is 60% equity
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You are joking right? Cramer is an entertainer? How many books has he written? Read his resume. Most CFPs would recommend the same for the average investor. It is recommended only as a safeguard.
 
check out his track record and picks ... he .continually has lagged just buying an s&p 500 fund .. he is an entertainer , no one should be following his advice and i think anyone buying or following his recommendations is wasting their time and money . his record speaks for itself . no further discussion needed , just google his record .

as far as what most cfp's recommend .. few recommend risk parity portfolio's . most are just old school indexing .. there are excellent risk adjusted portfolio's that do very well but the mount of gold varies in relationship to the percentage of equities ..

for 20 years now the harry brown permanent portfolio has beaten a 60/40 mix with 25 equities ,25% gold , 25% short term treasuries , 25% long term treasuries .

over the last 10 and 20 years the golden butterfly has beaten a 60/40 with 40% equities ,20% gold , 20% long term treasuries ,20% short term treasuries

https://www.marketwatch.com/story/jim-cramer-doesnt-beat-the-market-2016-05-13

as far as optimum gold there has been quite a bit of research on it ...
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mathjak107 said:
check out his track record and picks ... he .continually has lagged just buying an s&p 500 fund .. he is an entertainer , no one should be following his advice and i think anyone buying or following his recommendations is wasting their time and money . his record speaks for itself . no further discussion needed , just google his record .

as far as what most cfp's recommend .. few recommend risk parity portfolio's . most are just old school indexing .. there are excellent risk adjusted portfolio's that do very well but the mount of gold varies in relationship to the percentage of equities ..

for 20 years now the harry brown permanent portfolio has beaten a 60/40 mix with 25 equities ,25% gold , 25% short term treasuries , 25% long term treasuries .

over the last 10 and 20 years the golden butterfly has beaten a 60/40 with 40% equities ,20% gold , 20% long term treasuries ,20% short term treasuries

https://www.marketwatch.com/story/jim-cramer-doesnt-beat-the-market-2016-05-13

as far as optimum gold there has been quite a bit of research on it ...
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Well, if as you say no one should be following his advise then how do you account for his success in books, contributor to televisions finance shows, The Street.com. He has a juris doctorate from Harvard, magna cum laude, owned his own hedge fund for twelve years with only one negative years. I have had immense success following Cramer's recommendations not only in buying but avoiding and selling as well. If he is an entertainer then I am buying tickets.
 
how ??? he is popular and very entertaining but his advice has been no better then dart throwing when it comes to picking stocks .... .. don't take my word for it , do your own search ... a simple index fund beats him year after year
 
you need to first learn about how and why risk parity portfolios work as well as why they do before passing judgment as to how to use gold.. Cramer has nothing to do with putting portfolios together on his shows on a risk vs rewards basis ,,, it is not what people watch him for
 
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I don't think anyone's entire 401K should be rolled over into a gold fund. Others have posted charts and graphs which should give you an idea of how much you'd roll over if you do at all.
 
mathjak107 said:
you need to first learn about how and why risk parity portfolios work as well as why they do before passing judgment as to how to use gold.. Cramer has nothing to do with putting portfolios together on his shows on a risk vs rewards basis ,,, it is not what people watch him for
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That is your opinion, not fact. The portfolio advice of some professional managers is often as useless as a pocket full of washers.
 
fmdog44 said:
That is your opinion, not fact. The portfolio advice of some professional managers is often as useless as a pocket full of washers.
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no the numbers are right on portfolio charts dot com ... you can see how the portfolio's which combine gold , long term treasuries , short term treasuries and stocks have out performed conventional 60/40 and 50/50 with better gains , less losing years and smaller draw downs . that my friend is factual not opinion .... i don't run on opinion i demand facts .

here are the facts ... the butterfly portfolio which is just 40% equity ,20% gold ,20% long term treasuries and 20% short term treasuries vs a conventional 60/40 with total market fund and total bond fund . the butterfly has had better gains , less losing years and a smaller draw down since the 1970's .

there are all kinds of versions that use gold and treasuries , all with similar results .

all numbers are real returns .

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