Has anyone ever used 401k money to purchase PMs?

I was curious to read what are everyone's opinions and stories with taking out a loan on your 401k to invest in PMs? Say no more than $5,000 over a period of 2 years to payback via 401k contributions and employer matching?

Seeing how FBN, CNBC, and a few other sources are saying this market selloff and the central EU banks negative rates are eerily similar to the beginning stages of the 2008 crash. Yes, you have to make sure your job is secure while you pay back the loan, and cannot have the incoming future 401k contributions go into buying more shares of your funds already in your 401k.

 

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Just tell your broker, or whom ever controls your account, you wish to to buy PM's. They can sell your weakest stock investment and purchase the PM's for you. Some plans may wave selling or buying fee's or take a flat rate for the service. No loan is necessary.

 

My company's 401k has 18 investment options which are all mutual funds. From Bond Index to SP500 Index, Small Cap Index, Large Core Growth, International Index, Emerging Markets Fund to Capital Preservation Fund to 4 allocation funds: Aggressive, Moderate, Growth, Conservative. Buying PMs through Fidelity isn't an option for my 401k funds even though I know Fidelity sells coins and bars.

 

My 401K is tanking (due to world markets) and the penalty is too great to remove the money.

 

I prefer to hold physical PM's myself. If it all goes to hell, I don't trust someone else to deliver, especially with Wall Street's record of corruption.

 

Since late August of 2015 I moved my 401k funds into the Capital Preservation Fund that is offered through my plan. Doesn't lose $. But will gain $ at the end of the month when the interest rate on it pays out on the 30th/31st. I get about an extra $15 per month from it.

Since the start of this year I'm 60% CPF, 15% SP 500, 15% Small Cap Index, and 10% Bond Index. I do have PMs on the side through my own savings when I got into that market back in mid/late 2013. But I don't buy gold bc I 1. can't really afford 1 oz at times 2. for what I can purchase I go with silver. But looking at my 401k $ I can take a swing at gold and pick up about 4 solid ounces plus the 1.33 oz I already have. At the end of the year I was 0.5% return on 401k. This year so far even with my ultra conservative method I'm still -10.1%. And if a 08-11 crash happens I don't want to bank on my 401k funds to save me until the markets go back up like in 2012.

 

I agree. Such a plan would only work with an IRA, and even then only buying AGEs.

OP, I would argue against borrowing against your retirement to buy PM. I am not against owning PM, owning some myself, but I do it with other money I earn, not my retirement money.

 

And be prepared to pay taxes on the gains that will surely be noted on the account in addition to the fees, and watch any earnings get eaten up.

The loan option allows you to buy physical bullion/coin and sell when you want for cash. And of course you should report it to the IRS properly, since nobody else will report the sale or profit.

Pay yourself the interest on the loan - which back this summer would have been a better use of the funds. The way things are dropping, it might not be a good idea to pull out of the market. Caveat Emptor / Caveat Venditor.

Think 6 months and a year from now - what are your goals? Plan your moves - don't react.

 

Maybe I confused my ETF Account with my 401K. Sorry. :>( They are both with the same brokerage. I know I just called him to acquire my gold I Shares years ago, and there was no transaction fee. They do charge a very small yearly percentage for maintaining the gold account. I don't treat it as an investment, just an inflation hedge.

 

I have never seen a competent investment adviser who said to have more than 10 percent of one's portfolio in gold. Many say no more than 5 percent.

Also, any adviser I have ever dealt with says taking a loan out on a 401k is one of the absolutely worst ideas imaginable.

 

I pulled about $30K from my 401K in 2007 so my wife and I could adopt a daughter from China. Can't put a price on that. Fortunately, I pulled it out before the market went kaput, the interest rate on payback (paying myself) was 9.5% and as I was paying it back, I was coming back into the 401K at lower buy-in amounts. Pure dumb luck that it timed out that way but in the end, it was what we needed to do at the time. Now.....for gold or silver, I'd go with never.......

 

There's an exception to every rule and that was a marvelous one!

 

Two reasons for this - primary reason is that they don't want to see your money go away. They like to have their hands on it for their own selfish reasons. They get a cut of it.

The second reason is that most folks don't understand or pay attention to the market and don't know how to manage their investments on a regular basis. The "fear" is that you will lose the gains you would have had on the money.

In a down market, paying yourself interest is a gain - and if you had taken a loan back in May 2015 while the DJIA was at 18,400 - today you'd be thanking yourself because you'd be buying back in with every payment at a lower price - plus interest.

Taking out a loan now with the DJIA under 16,000 is risky because there's bound to be an upside over the course of the next year or so.

But they also say not to try and time the market. For the majority of the population, they are right.

 

If you mean to purchase and hold gold within your IRA account, you need to get legal governmental regulations for such and read them. I have, and I have also read the 'blurbs' that the various bullion companies issue to tell you how good it is ( for them).

It is a custodial account, they purchase ( you can't add your currently owned gold) with fees they disclose someplace in the paperwork. The time period between agreement and actual purchase of metal for you may vary ( don't expect it to be at todays close). Also they do not have to return the metal if you close it out, they can close with cash/check for value if they wish. Also, They store it ( fees) and it may take a long time to release it and ship ( fees) it to you by bullion transport. In a zombie invasion, you will never get it in time They will be worse than a local SDB for sure. Get a tax professional to work with you or read a lot ( Not from the bullion firms). If you do go with a bullion affiliated custodian, read and re-read their documents.

 

Desertgem is correct, and I will also point out that we've seen a few stories about IRA gold storage where the "supposed" gold has not actually been stored - and someone has taken off with the money.

All in all I think IRA stored gold "on paper" is a bad idea. My 2 cents worth. And I think borrowing to buy it is also a bad idea. From your own 401k, at least you are forcing yourself to pay interest back into your own account. The possibility of buying a depreciating asset on loan is always a risk.

My physical metal is in my possession and I am limited by distribution laws on an IRA.

If you want it, pay cash. Simple and safe.

 

Everybody should get their $$$ into a Roth IRA from whatever TDA account you have.

Don't invest your retirement or portfolio monies in gold or PMs. Do that with your personal bullion/coin holdings.

FWIW, I have worked in the financial field for 30 years and have both a CFA and CFP.

 

Sorry but I don't trust anyone that gives out blanket statement advice. Not "everybody" should.

A CFA/CFP should know better. Especially in this day and age.

The truth is that everyone that wants to blindly trust someone else with their money decisions should be prepared for the consequences.

If you want it done right, do it yourself. Seek as much advice and input as possible, but make your own decision.

 

If I said "everybody should eat fruit" I'm sure you could find someone allergic to apples or oranges. My statement still stands.

Of course there are outliers, as with anything in life. But by-and-large, a Roth IRA is probably the best tax-saving and wealth-building and estate-preserving mechanism for the middle class. The one exception would be when someone is making very little in their working years and then expects to make much more in their retirement years. Even then the numbers might work.

Conversions can be extremely lucrative, if you work out the tax situation pre- and post-retirement.

Who said to 'blindly trust' ? I said it was a great product and rather than say 95% or 99% or 99.9% of investors, I said 'everyone.' You're parsing my words too finely.

It goes without saying you ALWAYS have to do your own DD (due dilligence) on ANY investment.

 

Not just no, hell no. If you were investing in something that is more understandable or that you had a chance at influencing like a business or some land then absolutely. If any of us here have learned anything, it's that there is no rhyme or reason to what happens in the bullion markets.

The ashes have finally blew away from the last group of people that did that back in 2011. I'm talking about the ones that cashed out their retirements, took home equity loans, bought bullion with credit cards etc. Those that chased bullion up and bought silver at $35 expecting to sell it for $90 within months.

Those horror stories make me sad and angry at the system. The likes of talk radio told everyone the sky was falling because they were paid to. Personalities that up until that point only pushed fairly relevant products like Dinovite and Quicken mortgages.

I'm sad for those that bit and blew it all only to see it halved or worse in a few short years. I'm not saying don't buy bullion. Just don't mortgage the farm for some magic beans.

***Also, the fact that you're asking this one week into the first signs of life in the bullion market is also a clear sign this is a bad idea. Just pay cash for a little each month and don't look back. Hindsight can fuel bad decisions going forward.