If you want your retirement portfolio to look like anything besides owning a single stock, then you know there’s one very important principle for you to grasp: diversification. You’ve seen it over and over—in trade magazines, in your investment newsletter, and even here at AmericanIRA.com. But what does diversification really mean, and how can Self Directed IRAs lead you there?
That’s what we’ll explore today as we look at some of the traditional retirement investments people make…as well as some of the other options you have available to you including Self Directed IRAs. Remember: if you have a retirement to plan, there are countless options for you to retire with security and peace of mind. You just have to have a combination of knowledge and action. Let’s start with some of that knowledge right now:
Self Directed IRAs Allow for More Diversity of Retirement Investments
When most people think about retirement investments, they think of just one thing: the stock market. They watch the S&P and hope that the stock market will go up; after all, that’s where they have all of their money. They’ve been told over and over again that the stock market produces the best returns possible, so they’re counting on that fact to bear out in reality.
What’s the truth of the situation? The truth is, stocks are a good investment…but that’s not particularly insightful. Just about everyone knows that. That’s why people use Roth IRAs, traditional IRAs, and the like to invest in funds that track the stock market. They want a piece of the action. The problem? This can sometimes feel like putting all of your eggs in one basket. True diversification and a truly well-rounded portfolio will include stocks, bonds, and funds, yes…but there’s more to the story that needs to be told if you’re going to build a retirement portfolio that can stand the test of time.
Learning Alternatives and What They Can Do
If you want to round out your portfolio, you’ll invest in more than just stocks. That’s the simple truth behind diversification. It helps protect your money from the instability of the ebbs and flows of the stock market while creating more opportunities for growth in other sectors.
Consider just a few of the options you can use when you invest with Self Directed IRAs:
- Real estate. Real estate is one of the world’s most powerful investments because it allows you to use leverage to create a lot of value and profit potential for yourself. In a Self-Directed IRA, you can utilize non-recourse loans to make real estate purchase you otherwise wouldn’t be able to make.
- Precious metals. Precious metals are valuable because they serve as an alternate store of worth and value when you don’t want all of your money anywhere else, especially in turbulent economic times. They’re a “hedge against worry.”
- Private investments like private stock in companies are important, because they allow you to save for retirement without exposing your money to the public stock market.
- Private IRA lending is another way to seek out an investment without feeling like you’re exposing your money to different sectors that might be unstable. It also allows you to find the investments that suit your own personality and experience.
True diversification is achieved when you round out your portfolio and seek out alternative investments to supplement your mainstream investments. Continue reading us here at AmericanIRA.com to learn about Self Directed IRAs and call us at 828-257-4949 if you want to get in touch with us. We’ll be glad to talk about what a retirement portfolio can look like when you use self-direction.