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Silver often gets overlooked by the average investor as gold is often considered a safer investment. The truth is that investing in silver in 2021 may be a smart decision. A silver IRA offers several benefits, depending on your investment preferences and risk tolerance. It can help hedge stock market volatility and preserve wealth.
As 2021 approaches, here is a closer look at investing in a silver IRA.
What Is a Silver IRA?
A silver individual retirement account (IRA) is a type of self-directed IRA where you can purchase silver and other alternative assets, including gold.
As with other types of IRAs, such as a traditional IRA, you have the freedom to buy and sell assets using the funds stored in the account. However, instead of buying paper stocks and ETFs, you get to buy physical assets. The assets are held by a secure, third-party depository.
There are two primary types of silver IRAs: traditional and Roth. With a traditional IRA, your earnings from investments are tax-deferred until you begin making withdrawals. With a Roth IRA, you pay taxes on your contributions, but do not pay taxes on withdrawals, assuming you wait until you reach age 59-1/2.
How Can You Open a Silver IRA?
There are several ways to open and fund a silver IRA, including a direct transfer or a silver IRA rollover from an existing retirement account.
If you have an existing IRA, you can open a new account and initiate a direct transfer using a transfer request form. Your new custodian will submit the form to your previous custodian to transfer the funds. This process typically takes up to 10 days.
If you have an existing 401(k), you may perform a silver IRA rollover. Most financial experts recommend using a direct gold IRA rollover instead of an indirect rollover. With a direct rollover, your existing brokerage writes a check to your new custodian. The check is either sent directly to the custodian or your address.
With an indirect rollover, the check is made payable to you while the custodian retains 20% of the total funds to cover potential taxes. After receiving the check, you have 60 days to deposit it in your new account to avoid paying taxes on the transfer.
Silver May Be a Better Investment Compared to Gold
So, is opening a silver IRA in 2021 a good investment? Most analysts agree that silver remains a safe bet. Going into 2021, experts are predicting that silver will provide a better return compared to gold.
The price of gold is averaging about $1748 per ounce in 2020. Analysts estimate prices to reach $2200 in 2021, providing a return of about 25%. The average closing price of silver for 2020 is about $19.69 per ounce. Many experts predict the price to reach up to $30 in 2021, which is a 52% return on its current price.
Silver Is Likely to Provide Stability in the New Year
2020 has been a very volatile year, forcing many investors to seek safer investments such as precious metals. Silver is likely to continue providing a stable investment option in the coming year.
Analysts expect silver prices to perform well in the short- and medium-term. Silver remains an essential material for the industrial manufacturing and jewelry industries. It is also an important component in the production of batteries and solar panels, an area that is expected to dramatically rise in value in the coming years.
No investment comes without any risks. However, silver stands out as one of the safer options. If you want to hedge against inflation and protect your retirement savings, opening a silver IRA could give you greater peace of mind.
