The name “Traditional IRA” makes the account sound like it’s out of fashion. But the truth is, it’s not at all. In fact, the name “Traditional IRA” should inspire feelings of confidence, of experience, of the wisdom that being around for decades can bring. Today, investors love the Self-Directed Traditional IRA for a number of reasons. Not only does it provide all sorts of great opportunities for investing with the protections that come with a retirement account, but it makes for an excellent vehicle for investing your own funds in retirement assets that might not be considered quite so traditional. Here’s what you’ll need to know about Self-Directed Traditional IRAs, and why other investors seem to love them so much.
Opening New Possibilities with a Self-Directed Traditional IRA
Although the Self-Directed Traditional IRA has been around a while, it doesn’t mean you have to use the Self-Directed Traditional IRA using pre-established pathways, like investing in stocks or bonds. Using a Self-Directed IRA administrator, you can manage the account in a number of different ways. For example, you can direct the administrator to buy/sell precious metal and real estate assets within the account. You can use the full range of investment options available to you, which means that you can diversify out of the stock market and use real estate, private equity, private notes, and all sorts of other asset classes to build a tough, well-diversified portfolio.
That’s what we mean by “new possibilities.” Using these investment avenues as you see fit, you’ll be able to try all sorts of different strategies in your retirement account, if you wish. Remember: you’re in the driver’s seat here. You can do all sorts of things, from guiding it entirely yourself or working with a financial advisor. But the point is, you can do it all with a Self-Directed Traditional IRA thanks to the freedoms it affords you as a retirement investor.
Avoiding Correlation with the Stock Market
These days, one glance at the stock market will show you that it’s not always what you want it to be. It can be up and down. During periods of economic uncertainty, it can feel like there’s no bottom. But you don’t have to rely solely on the stock market for your retirement returns. After all, don’t you get frustrated when politicians talk about everyone’s 401(k) and retirement plans and the stock market, as though they were one and the same?
You don’t have to embrace this strategy if you don’t want to. Using a Self-Directed Traditional IRA, you can diversify away from the stock market and into less-traditional—but no less valid—retirement assets. True, there are some limits here. You can’t place a life insurance policy in a Traditional IRA, for example. Nor can you place collectibles like art or fine wine.
But you can access alternative asset classes through a Self-Directed Traditional IRA, which means you’ll have the option to invest in a wide range of retirement asset classes you like. And these can include asset classes that don’t necessarily correlate to every single move the stock market makes.
Is Now the Time for a Self-Directed Traditional IRA?
A Self-Directed Traditional IRA is a powerful way to plan for retirement. It gives you the option of setting aside pre-tax money into a retirement account to allow that money to grow. But you have to know how to invest it wisely, because when you self-direct, the power is in your hands.