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Are Gold Coins and Hedge Funds Good Retirement Plans?

  • 7 July 2015
  • Author: Cari Holbrook
  • Number of views: 2742
Are Gold Coins and Hedge Funds Good Retirement Plans?

News broke last month that Renaissance Technologies, owned by hedge fund leader James Simons, abolished its 401(k) plan and won the government’s permission to put pieces of Simons’ own Medallion fund inside Roth IRAs for employees instead. As Bloomberg News reports, “That means no taxes—ever—on the future earnings.”

Relying on hedge funds—which include non-stock commodities like gold or silver, U.S. Treasury or foreign bonds, or currency swaps—for retirement income can pay off, but it’s risky.

First, you’re relying on a private trustee to administer the funds for you. Administrators of these types of private entity fund are subject to few public disclosure requirements (as opposed to a mutual fund administrator, for example) and, therefore, are not transparent. Fees for administrators can also be quite high. There is some wiggle room with gold, including American Eagle Gold Bullion Coins, but the rules can be tricky to navigate without a trusted financial professional to help guide you.

“American Eagle coins are receiving government preferential treatment in several ways,” says Chapman Stout, owner of Medlars Jewelry, which is the only San Antonio bullion dealer to be referred by the U.S. Mint.  “For large investors, it's the only bullion product (gold silver or platinum) we're recommending.” 

Second, distribution rules for hedge funds are governed by the contract between the hedge fund and the investor rather than the stricter rules governing more traditional retirement accounts. Investments in hedge funds are illiquid, which means they often require investors keep money in the fund for at least one year before withdrawals can be made. Those withdrawals can usually only happen at certain intervals—like quarterly or yearly—as well. This attribute alone makes it a complicated vehicle for those needing to rely on it for retirement or other income.

Hedge funds and other alternative investments can be a good idea for a very select few, if they plan wisely. Contact us to discuss whether or not using alternative investments like hedge funds may be a viable option for your individual situation.

Image Copyright: backyardproduction / 123RF Stock Photo

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