Ask most investors what they think about the stock market—or what to do with the stock market—and they will often answer the same way. They think it is all about timing. People are so caught up in whether or not stocks are going to go up or down that they don’t pause to consider their own strategy. After all, building retirement wealth is not all about picking stocks. And it is not about timing. Retirement investing is often about putting money aside for decades at a time. And for Self-Directed IRA investors, the considerations involve much more than market timing.
With that in mind, what should investors think about when considering opening a Self-Directed IRA? Should they be concerned with timing, or something more? Let us look at what investors are thinking when they open a Self-Directed IRA.
When Market Timing is the Least of Your Concerns
For many individual investors, market timing can be a spooky thing. For example, anyone who opened an IRA right before the crash associated with the COVID-19 pandemic in 2020 might justifiably feel strange about their decision. To feel the foundations of the stock market falling out from under one’s feet can be a difficult experience.
However, with a Self-Directed IRA, market timing does not have to be such a primary concern. For starters, a retirement account is often built for long-term wealth-building. Individual fluctuations from week to week, month to month, or even year to year, should not always factor into these long-term decisions. Many investors who open a retirement account are thinking about their life thirty, forty, or even fifty years down the line.
The Self-Directed IRA has an additional wrinkle that people will want to think about. It means that investors can easily invest in nontraditional retirement assets, such as real estate and precious metals. For example, 2020 has been a hallmark year for precious metals, with gold reaching record highs. Investors who have diversified their portfolio with a Self-Directed IRA will not be as concerned about market timing as people who focus exclusively on the stock market.
Is the Best Move to Wait?
When it comes to retirement investing, the sooner, the better. That’s because investing early can allow investors to take advantage of compounding returns. Compounding returns mean that the longer your timeline is, the better you can expect your results to be. When an investor gets into the markets early by opening an IRA, it means there is lots of wiggle room.
Waiting for the stock market to “fully recover” before investing is not always the best move for everyone. For investors who are thinking about nontraditional assets, the stock market often does not play in as a factor when it comes to timing. For many investors, getting started early is the best way to proceed. For example, for an investor opening a Self-Directed IRA, kicking off the process as soon as possible helps not only put aside more money for retirement, but helps prevent the kind of procrastination that can eat into valuable investment time.
The good news is that a Self-Directed IRA is not as complicated as it might sound. Working with a trusted Self-Directed IRA administration firm is a powerful way to get started, because it means that the investor has someone in their corner who can help them. While a Self-Directed IRA administration firm like American IRA will not act as an investment advisor, it will help facilitate the process of opening the proper accounts, signing the proper paperwork, and getting started on a retirement investment journey.