Should You Roll Your 401(k) Into An IRA?

Many employers throughout the United States offer a benefit to employees known as a 401(k). It is named this due to the section of the IRS tax code that the provision comes from. The vast majority of employees do not pay that close of attention to their 401(k) or what all they are able to do with it. If they enroll for it at all they often just put their money into a particular fund and forget about it. This is not necessarily the best way to approach things, and there are a lot of options available to those who decide to use their 401(k) to their advantage.

The Restraints Of A 401(k)

The 401(k) is a great way to get started investing because many employers offer a match on at least some of the funds that an employee puts in themselves. However, the 401(k) is not exactly the best option for having the most control over your investments.

The typical 401(k) program offered by an average employer may offer a dozen or even a few dozen options for investment for employees. That is a decent start, and it is always great to take advantage of the free money that is offered by your employer. However, there is a better way to do things.

Rolling Over Your 401(k) To An IRA

Since 1974 it has been possible for Americans to choose to roll over their 401(k) contributions to a traditional IRA account. What does that mean exactly? Essentially, this means that it is possible for more everyday people to invest in the kinds of stocks, bonds, currencies, and even precious metals that they want to. A gold IRA rollover is now something that is a possibility.

The reason to desire this control so greatly has to do with the fact that it allows you to be more nimble when it comes to reacting to various market conditions. Imagine for example that you feel that the market is overdue for a fall. You could just keep throwing your money into your 401(k) and hope for the best. However, that may result in you losing a chunk of the funds that you put in. With a self-directed IRA account you have the ability to put your funds into more defensive investments to prepare for what you see as a possibility of a drop in stocks.

What Is So Great About Gold?

Holding gold investments is a good choice for a well-balanced portfolio in the opinion of many experts. If you are not familiar with investing you should know that gold is know as a “risk off” investment. That refers to the type of investment that a person may want to make when they want to take some risk off of their portfolio. One does this when one believes that the most likely direction of the market is downward.

Getting into gold in your IRA is perhaps something that you want to do just for a short period of time or perhaps for a much longer span of time. Either way, you should make sure that you have the flexibility to get the kind of investments that you are interested in getting. This means talking with your employer and your 401(k) provider to determine how you can rollover your funds when you need to.

Self-Directed Funds Require A Lot Of Homework To Be Successful

Don’t let the fact that self-directed IRA funds require a lot of homework slip by you. It sounds great to have full control over your investment choices and it is, but you need to be prepared to do your homework on those funds if you want to do well. Self-directed means exactly what it sounds like. It means that there is no screening of the investment choices that you make. You have to pick and choose your investments for yourself, and that can be risky if you don’t know what you are doing.

Just watching a little bit of financial news or listening to the word around the water cooler is not enough. You need to be fully prepared by doing a lot of looking into the numbers of the companies that you consider investing in and the fundamentals of commodities that you may put money into.

The choice is yours, but it is often better to have greater options in terms of the amount of investments that you can possibly get involved in. Be educated and be informed about what you are doing when investing.

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