If there is anything COVID-19 taught us, it is that a life-changing event can take hold in mainstream society with little to no warning. Self-Directed IRA investors who were not thinking about a global pandemic on January 1, 2020 suddenly found it taking over different aspects of their lives. Many people put investing on the backburner while they sorted out how to handle schooling, working, and family relationships while under lockdown. So, it is no surprise that the curveball of COVID-19 has thrown many Self-Directed IRA investors for a loop.
What should investors have learned by now? Here are a few things about the Self-Directed IRA that COVID-19 helped to highlight:
1: Real Estate Property Can Be More Valuable Than You Think
Because investors with a Self-Directed IRA can put retirement funds aside for real estate, it shows the potential value in this type of investment. After all, with more people working from home thanks to the COVID-19 shift in labor, it means that more people are thinking about staying put in their homes. This led to a shorter supply in relation to the demand. Fewer people need to live near cities, which means that plenty of suburbs may have demand for real estate.
For retirement investors, holding on to a hard asset like real estate can be a motivating factor for using a Self-Directed IRA. After all, many such investors find it helpful to put money aside in harder assets. And with the stock market volatility that COVID-19 brought, many investors with a diversified retirement strategy could rest easier.
American IRA does not give specific investment advice. But the Self-Directed IRA does make it possible to invest in nontraditional assets like real estate. For many investors, COVID-19 was a wakeup call to the potential importance of real estate for diversification. True diversification does not only refer to holding multiple stocks or even stock funds. But instead, investors can add more security to an account, potentially, by exploring the options available to them with a Self-Directed IRA. Of course, with a Self-Directed IRA, the investor calls the shots, which means it is just as possible to avoid diversification if the investor sees fit.
2: Retirement Will Come; It is a Good Idea to Plan for It
Does not sound like much of a surprise? It depends on who you ask. For many investors, they use a Self-Directed IRA because they want to have retirement funds in assets that may become more valuable in economic doomsday scenarios. And this is certainly an option. For example, people turn to Precious Metal IRAs, investing in gold or silver, because they believe those metals will hold on to their purchasing power for the long-term.
However, that does not mean that there is a one-size-fits-all approach. 2020 was as close to an economic doomsday scenario as the world has seen since 2008, and many aspects of the economy have recovered. This shows investors that it is important to plan for retirement eventually happening. Many investors who prefer to avoid thinking about themselves thirty years in the future may find that they have not done enough adequate planning. A Self-Directed IRA is one way to get started easily. It is easy to create an account, fund it, and begin investing—especially when working with a Self-Directed IRA administration firm.