Month: December 2021

Saving for retirement isn’t just about ourselves—it’s also about creating a legacy that can be passed on to our loved ones. Thankfully, many different avenues and options are available to us as we build our retirement portfolios—so when one option is no longer available to us, we gain the opportunity to reevaluate our strategy and explore other options that may still help us realize our long-term goals.

For example, the House of Representatives recently passed a version of President Biden’s Build Back Better bill—a sweeping piece of legislation that includes funding for pandemic relief, infrastructure, social services, and more. One piece of this legislation calls for an end to the so-called “backdoor Roth IRA conversion.”

According to a November 30, 2021, article by CNN, “Starting next year, the House-passed bill would prohibit all taxpayers from converting their after-tax contributions using this ‘backdoor’ conversion method to a Roth IRA.”

As of this writing, the House version of the Build Back Better bill has not passed the Senate or been signed into law. But even if it fails to become law, it brings up an interesting question: What would happen if one of our retirement options suddenly became unavailable, and where else can we look for ways to preserve or even grow our wealth?

A backdoor Roth IRA conversion can provide tax-free growth to those typically unable to contribute to Roth IRAs. That may soon change.

Broadly speaking, a Roth Individual Retirement Account (IRA) allows you to contribute after-tax dollars, which then grow tax-free and can be withdrawn tax-free once you retire with no required minimum distribution (RMD). By contrast, a traditional IRA allows you to make pretax contributions, but withdrawals are then taxed.

Currently, only those whose modified adjusted gross income is less than $144,000 ($214,000 if filing jointly) are allowed to contribute to a Roth IRA. However, a “back door” exists whereby high-income earners can still contribute indirectly to Roth IRAs by contributing to a traditional IRA and then immediately converting that traditional IRA to a Roth IRA. A similar conversion method can be used to put 401(k) funds into a Roth 401(k) account.

There are several benefits of putting money into a Roth IRA. According to a November 22, 2021, article by Investopedia, some may seek out this option to “save tens or even hundreds of thousands of dollars on taxes over the years.” Investopedia continues by saying that since Roth IRAs have no RMDs, “you can leave your money in your Roth for as long as you want, which means it can keep growing indefinitely.”

If the House-passed Build Back Better bill passes the Senate and is signed into law, it may remove some of your tax-deferred options when it comes to building your retirement portfolio. But don’t forget—whether this happens or not, you have many other IRA options to explore.

You have other ways to experience the benefits of an IRA.

If you’re looking for additional ways to experience the benefits of an IRA, one option you may wish to explore is a self-directed IRA. This type of IRA allows you to receive the same tax advantages as with a conventional IRA but throws open the doors of possibility when it comes to choosing your assets—and it allows you more direct control over your asset mix.

For example, with a traditional IRA, your custodian generally presents you with a limited number of assets to choose from, such as stocks, bonds, or exchange traded funds (ETFs). But with a self-directed IRA, you can include alternative assets like real estate, cryptocurrencies, or physical precious metals like gold and silver. Since you’re able to diversify with more assets (and more asset classes), this type of IRA may help you reduce your overall risk exposure and provide you additional opportunities for upside potential.

The popularity of self-directed IRAs has been growing. On August 14, 2021, Forbes wrote, “In less than 50 years, the self-directed IRA has become the most popular way for retirement savers to [move] their retirement funds into IRS-approved alternative asset[s]…. With Americans having over $35 trillion in total retirement funds, the future growth potential of the self-directed IRA industry is significant.”

We’ve seen some of this growth firsthand at U.S. Money Reserve. This past year, our IRA division was one of our organization’s fastest-growing sectors, with more and more of our clients looking to take greater control of their retirement strategy. But everyone’s financial situation is unique, and it’s important that you take the time to understand all your options so you can make educated decisions regarding your portfolio.

Many experts point to diversification as a key element of portfolio management.

It’s possible that with the passing of the Build Back Better bill, Americans may begin looking for new ways to save for retirement as well as new ways to experience the benefits of IRAs. And that’s not a bad thing—retirement is, after all, a long-term goal, and we may need to reexamine our strategies from time to time, explore alternative options, and make adjustments to our portfolios as our unique situations change.

The post Congress May End the Backdoor IRA Conversion—Here’s What You Need to Know. appeared first on U.S. Money Reserve.

The holidays are getting closer, and you’ve decided (perhaps after reading last week’s blog) that gold may be the perfect gift for your loved ones. So now it’s time to dig just a little deeper and examine some of your many options when it comes to buying gold.

For example, our Account Executives at U.S. Money Reserve are constantly asked about the differences between bullion and proof coins. Which is better for a portfolio? Is one better than the other?

Right off the bat, I’ll answer that second question: Proof coins are not “better” than bullion coins, nor are bullion coins better than proof coins. Each type of coin has its own strengths when it comes to diversification, and each can hold a unique place in your portfolio.

As I’ve said many times before, I believe that the best decision you can make is an educated decision. So with that in mind, let’s examine some of the similarities and differences between bullion and proof coins.

Proof coins are similar to bullion coins but feature several important differences.

Like bullion coins, proof coins often feature legal-tender denominations, meaning each coin’s weight and purity are guaranteed by the coin’s issuing government. They also often feature the same design as bullion coins.

“Bullion” is a term we use to refer to any precious metal coin struck with a standard finish. “Proof” coins undergo a specialized minting process that takes time, skill, and the latest in minting technology.

Proof coins start out as highly polished planchets, or blanks, which are then hand-loaded into a coin press before being struck multiple times with dies that have also undergone a special treatment. The combination of these elements results in a high level of detail, with frosted images and mirror-like backgrounds.

Personally, I love the extra level of artistry that proof coins exhibit. Even more, I love the impressive levels of profit potential and diversification that proof coins can provide.

Proof coins’ relative scarcity impacts their demand and profit potential.

With all the work and time that go into making proof coins, the U.S. Mint and mints around the world almost always strike proof coins in smaller mintages than their bullion counterparts. Take the 1998 Gold Eagle, for example: While the U.S. Mint struck nearly 1.5 million bullion American Gold Eagle coins, the Proof Gold Eagles numbered just 26,000. That’s around 57 bullion coins per each proof coin.

This relative scarcity impacts proof coins’ profit potential. Bullion coins’ potential is typically tied exclusively to the weight of their precious metal content. But since proof coins are also prized for their scarcity, they can have additional insulation from spot price variations as well as greater profit potential.

Before I make any significant purchase, I like to consider what it will do for me in the long run. Proof coins have seen substantial gains over the long run, making them a viable option for any portfolio.

Both bullion and proof coins make fine additions to any portfolio.

Financial advisors often point to diversification as one of the key ways we can lower overall risk exposure in our portfolios. Having both proof and bullion coins allows us to not only diversify with precious metals, but to also diversify within that asset class by owning precious metals that react slightly differently to different factors.

If you’re considering buying gold for yourself, it’s also good to know that both bullion and proof Gold Eagle coins struck by the U.S. Mint are eligible for inclusion in a self-directed precious metals IRA, allowing you to experience the tax benefits of an IRA while diversifying your retirement portfolio with the added profit potential of both types of gold coins.

When it comes to selecting bullion or proof gold, the choice, as always, is up to you. But if you’re asking my personal opinion, my honest response is: “Why not both?”

The post Proof Coins vs. Bullion Coins: Is One Better Than the Other? appeared first on U.S. Money Reserve.

“We’re in a bubble. Bubbles don’t last. When this bubble breaks, there’s going to be an adjustment. I see upward inflation…costs are going to go up.”

— John Karow, Scottsdale Bullion & Coin Senior Precious Metals Advisor

The past few weeks have been frustrating for investors and consumers who were trying to gain a clear understanding of the economy’s health – or lack thereof – despite the Fed’s ambiguous talk. Earlier this month, inflation fears were confirmed when Federal Reserve Chairman Jerome Powell reversed the talk of “transitory” inflation.

Inflation is already setting new records with retail prices getting hit especially hard – just in time to hurt Christmas shoppers. Watch the video above to see what Scottsdale Bullion & Coin Senior Precious Metals Advisors Joe Elkjer and John Karow have to say about the current state of inflation and how it’s going to impact holiday shopping.

How much are the holidays going to cost?

Ever since Jerome Powell stopped describing inflation as “transitory”, the wool has been pulled up from over the eyes of consumers. For over a year, the Fed attempted to placate the country by downplaying the severity of inflation. But now, the numbers are in. And it’s evident that inflation is here to stay.

Wholesale prices have catapulted by a whopping 9.6% in November from the same time last year, blasting through to record-levels. The Labor Department’s Producer Price Index – a tool that predicts the impact of inflation before it hit consumers – jumped 0.8% in November, on top of the 0.6% rise in December.

All these numbers are painting a grinchy picture for holiday spending. In fact, Christmas shoppers can expect to pay 8% higher in retail prices this season. PNC Bank’s annual Christmas Price Index pegs consumer holiday spending at 5.7% higher than in 2019. The seemingly endless money printing by the Fed has failed to stave off inflation entirely, and people are now starting to feel its effects.

Take Advantage of the Inflation-Protections of Gold

With inflationary pressures rapidly decreasing the value of the dollar, forward-thinking investors are already looking for ways to protect their hard-earned money. The assets most at risk during extended periods of inflation are those tied directly to the greenback. As the US dollars’ worth decreases so does the value of those assets.

We’re currently in a bubble, and the bubble is going to pop at some point. Inflation is setting records and shows signs of slowing down. Smart money is flowing into reliable inflation hedges such as gold, silver, and other precious metals. These assets have remarkable stability even when the rest of the economy is on the fritz, keeping your money protected come hell or high inflation.

Don’t get caught behind the trend. Buy gold and protect yourself from the volatility of the greenback. Grab our free precious metals investing guide before the bubble bursts.

“It’s looking more and more like hard assets are the only thing you can protect yourself with…The wealthy are allocating assets into longer-term holds.”

— Damian White, Scottsdale Bullion & Coin Senior Precious Metals Advisor

Since mid-2020, Jerome Powell had been using the term “transitory” to describe the inflationary pressures impacting the economy. In his own words, the Federal Reserve Chairman said the term “transitory” was used to describe price fluctuations that “won’t leave a permanent mark in the form of higher inflation.”

Powell made headlines last week after walking back from his use of the word “transitory” when describing the state of the economy. This about-face dealt a massive blow to Americans who were hoping the increasing prices would just be a temporary setback. Now, the federal reserve has made it clear that inflation is here to stay.

If you’re wondering how you should approach this harsh reality as an investor, you’re in the right place. Watch the video to hear from Scottsdale Bullion & Coin Senior Advisors Damian White and Steve Rand.

What should investors do now that inflation is no longer transitory?

The persistent narrative of “transitory” inflation caused a lot of head-scratching among investors who we’re seeing the exact opposite happening right in front of their eyes. With the prices of consumer goods such as gasoline and groceries skyrocketing, there was a glaring disconnect between the real economy and what the fed claimed was happening.

This bubble of lies finally burst last week when Powell spoke to Congress about retiring the word “transitory”. This sly comment came as no surprise and only confirmed the suspicions we’ve had all along: Inflation ISN’T transitory, and recent price changes could be here for the long-term.

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The price hikes Americans have been seeing across the board aren’t going to magically disappear as the Fed had been reassuring the public for over a year. It’s now clear the increased pricing is a more permanent fixture in the US economy moving into the foreseeable future. The question now becomes: how can people protect themselves from this kind of inflation?

Wealthy investors are starting to move towards fixed assets to escape from the uncertainty of the US dollar. Assets that aren’t dependent upon the strength of fiat, such as precious metals, can protect your capital from the value-draining effects of inflation, especially when it occurs over the long term.

Free Your Assets from the Stranglehold of the US Dollar – Invest in Gold and Hold!

With the Fed backing down from its long-standing talk of “transitory” inflation and the government continuing to spend trillions of dollars, savvy investors are looking for ways to protect their assets. If you’re wondering “what happens to the gold prices if the dollar collapses?”, you’re already thinking in the right vein.

For centuries, gold and other precious metals have been viewed as reliable hedges against inflation. In other words – assets that outperform fiat currency in times of economic downturn and uncertainty. Despite being a slow-moving asset, that’s exactly what gold has done through dozens of domestic and global economic crashes.

It’s time to protect your hard-earned money from the whims of the federal government and invest in something that’s truly valuable. All of the capital you have in the US dollar is 100% at the mercy of federal regulators who have proven to be untrustworthy. These “transitory” comments are just the latest example.

Without fail, investors end up kicking themselves for not investing in gold sooner. The key to getting through the volatility of the greenback is to buy gold and hold. Get a copy of our free precious metals investing guide before gold takes another jump!