Is it time for a Self-Directed IRA to ramp up your retirement savings? That may be, according to a recent Verizon Business survey, which shows that “a growing number of small business owners are worried about their financial security with inflation cited as their biggest headache.” That quote comes from Fox Business, which also points out that the majority of respondents in this survey say “business is not better than it was a year ago.”
Inflationary pressures have many business owners not only worried for their short-term prospects. Business owners also have to think about retirement savings. Every dollar in retirement savings shrinks when inflation goes up—just as every dollar in your wallet shrinks. To help combat that inflation, many savvy investors turn to alternative asset classes like real estate and precious metals to hedge and diversify their portfolio. But what can business owners do as inflation fears ramp up? Let’s explore.
The New Verizon Business Survey: 82% of Respondents are Worried About Inflation
The survey came in the form of the annual State of Small Business poll, conducted by Morning Consult. It showed that 82% of those who responded were expressing worries about inflation. But that isn’t the only worrying number. 72% also noted that they’re concerned about their own financial security, up from 67% in 2020—in the midst of a global pandemic.
In other words, more business owners are worried about their financial security now than they were during a crisis.
This has particularly hit businesses that feel the effects of inflation directly. For example, 72% of respondents of the food and beverage industry said they were concerned about maintaining inventory levels and being able to fulfill orders. That included 62% of retailers, who agreed.
In other words, small businesses of almost every type are feeling the heat from inflation. And this, in turn, is making some small business investors think about their long-term financial security. To that end, it’s worth noting that small business owners have access to potential Self-Directed IRA accounts such as Solo 401(k) plans and SEP-IRAs which make it possible to invest in a wide range of retirement assets. And as the current inflation fears are showing, it might be better to get started sooner rather than later.
Using a Self-Directed IRA to Hedge Against Inflation
Investors in any type of retirement account have some sort of recourse when it comes to inflation. Some investors, for example, might choose to seek out ETFs in commodities, which some people believe hedge against inflation. Others might invest in REITs, or Real Estate Investment Trusts, counting on the value of the land to go up in periods of high inflation.
But that’s not all a small business owner can do. A small business owner using a Self-Directed SEP-IRA, for example, can make significant contributions toward a retirement account and then use that retirement account to make investments in alternative asset classes such as real estate, precious metals, and even private loans. Accounts like SEP-IRAs have especially high limits, which can be appealing to a successful business owner with income to spare.
However, inflation is something that affects everyone—not just small businesses. That’s why so many people flock to Self-Directed IRAs, knowing that these accounts make it possible to invest in the full range of retirement asset classes available to them.