Self-Directed IRA

Controlling a Self-Directed IRA in an Inflationary Economy

What do you do when you work hard to put money away, but the value of the dollar itself starts to wane? That’s what’s known as an inflationary economy, and it’s something that’s hit the financial headlines over the past few years. As inflation becomes a growing concern for many investors, Self-Directed IRAs are emerging as a powerful tool to help you exercise some more control over what happens in your retirement account. In this blog post, we’ll explore how Self-Directed IRAs can valuable assets in an inflationary economy and provide you with the knowledge to navigate these uncertain times with confidence.

Understanding Inflation and Its Impact

First, let’s explain the concept of inflation. Inflation refers to the steady increase in the prices of goods and services over time. When inflation rates rise, the purchasing power of your money decreases. In other words, the dollars you save today may not be the same as the dollars when you retire. At least not on a pure value basis.

Traditional retirement accounts, such as 401(k)s and traditional IRAs, often limit your investment options to stocks, bonds, and mutual funds. While these assets can be valuable components of a diversified portfolio, they may not provide the hedge against inflation that alternative investments can offer. That’s where the Self-Directed IRA comes in.

Diversification through Self-Directed IRAs

Self-Directed IRAs provide you with the flexibility to diversify your retirement portfolio beyond conventional assets. By investing in alternative assets like real estate, precious metals, private equity, and more, you can create a balanced portfolio that can help safeguard your savings against the erosive effects of inflation.

Real assets like real estate and precious metals have historically proven to be effective hedges against inflation. Their intrinsic value tends to rise with inflation, helping you preserve your wealth over time. With a Self-Directed IRA, you have the autonomy to allocate your funds into these types of assets, giving you greater control over your financial destiny.

Taking Advantage of Investment Opportunities

In an inflationary economy, investment opportunities can arise that may not be readily available in traditional retirement accounts. Self-Directed IRAs empower you to seize these opportunities, whether it’s investing in income-producing real estate, acquiring precious metals, or collecting income in a retirement account via private notes.

For instance, you can purchase rental properties that generate rental income, which can be a stable source of cash flow in times of inflation. That cash flow can potentially increase as the cost of real estate increases, which keeps the income side of your retirement account’s ledger healthy.

Active Portfolio Management

One of the key advantages of Self-Directed IRAs is the ability to actively manage your portfolio. In an inflationary environment, staying actively involved in your investments allows you to adapt to changing market conditions and make timely decisions to protect your assets.

Regularly review your Self-Directed IRA investments, assess their performance, and consider rebalancing your portfolio as needed to align with your long-term financial goals. This level of control can be invaluable when navigating the uncertainties of an inflationary economy.

Planning for an Uncertain Future

Self-Directed IRAs offer a compelling solution for individuals seeking to control their retirement savings in an inflationary economy. By diversifying your portfolio with real assets, seizing unique investment opportunities, and actively managing your investments, you can position yourself for an economy that looks red-hot—but not always in the best way. Prepare for overheating inflation by diversifying your accounts as you see fit.

If you’re interested in exploring the benefits of Self-Directed IRAs in more detail or have questions about getting started, reach out to American IRA at 866-7500-IRA.