Losing IRA

Many ads from professional advisers and companies on television, radio, and print advertisements defy logic when it comes to suggesting you take your IRA (401-k payout), SEP, Inherited IRA, or any other retirement plan and invest in gold, silver coins bullion. Or Crypto coins.

Yes, I invest in those alternative types of investments. But I adhere to the standard and proven investment pyramid that suggest these type of speculative investments belong at the tip of your investment portfolio and remain in the 5-10% range of your total, diversified investment portfolio.

Instead, they want you to transfer your entire IRA into their hands. And if any SMART CPA or other tax professional was to be asked just how smart that would be, hopefully, the answer would be:
”It’s a good way to have a losing IRA.” The safest investments belong in your retirement plan since any losses incurred can not be “harvested” and deducted on your annual tax return. (IRS gives you back some of your loss based on your capital gains tax rate). If tax rates go up (duh, they will), this means, even more, to buy smart and don’t turn a winning IRA account into a loser.

All variable investments go up and they go down over time. Some gravitate to higher highs over time such as well-picked stock portfolios with quality companies. Or most high-rated mutual funds. But to take your largest asset and transfer the whole enchilada into a physical gold account, or a physical silver account (many more metals can be bought and stored for you beyond these two most popular metals), you are setting up your account as a losing IRA.

What I am saying is that when you invest in risky alternative investments inside the IRA “wrapper”, you are forever restricting yourself from taking any tax loss on your personal annual income tax return. The tax basis for the most part is always “ZERO” in these types of accounts which are fully taxable someday to somebody. Either you when you retire or your heirs after you die.

The current financial conditions worldwide scare people into making this HUGE mistake. If you want to own gold or Bitcoin, shun those wanting to grab your large IRA or 401-k retirement payout. (or your inherited IRA). Buy the riskiest of all investments in small quantities only.

Your retirement money is either your largest asset or second largest asset along with your home equity. All retirement money belongs in either fixed investments such as indexed fixed annuity contracts (for older clients 55+ in age), or well-rated mutual funds and/or professionally managed stock portfolios.

All because you lose a huge deduction we can take on your tax return. Every year, my investor tax clients are reminded to harvest their portfolio losses and sell enough “losers” to match gains when possible. Or if they are carrying forward past capital losses on their return, to sell off enough gains to match those losses carried forward to end up with a net Zero capital gains tax. Simple stuff. Sadly, few do it.

For a sit-down or phone conference on the right way to buy alternative investments such as gold coins or bars, or to start buying Cryptocurrencies, I am available for general consulting in this area.

M.D. Anderson