When Is It Time to Open a Self-Directed IRA?
Retirement can feel like a tricky equation to solve. But generally, over the long-haul, you may find that investing is more likely to work the sooner you get started. The problem? Looking around, it can always feel like there’s something not quite right with the current market. Even before you open a Self-Directed IRA, it can be a common feeling to imagine that you’re investing money into assets that are about to go down. Economic doom and gloom seem always around the corner with every headline. And when that’s not the case, you may feel a bit hesitant about getting started while the market is hitting all-time highs.
So that leaves us with one question: when it is time to open a Self-Directed IRA? Let’s look at the history of some of the markets to get a closer look at this question.
What Happens to Markets over the Long Haul?
We consulted an article from Investopedia to show just how you can expect some investments to turn out over the long haul. Why the long haul? Because if you’re investing in a Self-Directed IRA, chances are that you’re thinking about the long-term future. It’s true that some investors have to get started later in life, when the time horizon isn’t so long-term. However, for the most part, retirement investing is thinking in terms of ten and twenty years and beyond—and not the next two years, for example.
In the Investopedia article, Has Real Estate or the Stock Market Performed Better Historically, Investopedia noted that both of these styles of investing tend to create a lot of wealth for their investors. The stock market overall will generate higher returns on average—however, the stock markets also tends to be more volatile. For this reason, many investors will typically stay away from stocks and stock funds if their time horizon is a little shorter. For example, if someone is saving up for the downpayment on a home, and anticipates that they can save enough in a 2-year time period, there’s a good chance that they will not use a stock market fund to park their money in.
Real estate also has the added benefit of generating high income, which can be a powerful incentive for people who are investing with Self-Directed IRAs. This income can generate money that flows to the retirement account for a long time. This, in turn, creates plenty of incentive for people who want to save for retirement to put much of that money towards real estate. And this is typically only possible through a Self-Directed IRA—that is, if you want to have the tax benefits that come with an IRA.
Using a Self-Directed IRA As Soon as Possible
One thing about the Investopedia article is clear: you can’t expect these kinds of returns if you’re looking at the short term. You’ll greatly increase your chances of success in any type of market if you start as soon as possible and continue your smart investment strategies over the long term. If that’s the way you approach it, both real estate and stock market investments may work out for you over the long haul. That’s because short-term volatility won’t matter as much if you have a consistent retirement strategy. And while your Self-Directed IRA administration firm won’t advise you on this strategy, it can facilitate the purchases you make within a Self-Directed IRA. That’s why if you want a well-diversified portfolio, you can begin investing with a Self-Directed IRA. Give us a call at American IRA to find out more about how it works: 866-7500-IRA.