In 2022, a period of high inflation kicked off—and it rightly scared investors. After all, if you put money in a retirement account and watch it grow at less than the pace at which the value of your money deteriorates, it feels like you’re going backwards. In fact, when measured against inflation, it’s possible that you are. That’s why investors are eager to learn about alternative strategies for asset protection against inflation when using a Self-Directed IRA. What are your options to hold on to the value of your retirement assets? Let’s explore.

Precious Metals in a Self-Directed IRA: Time-Tested Against Inflation

Ever hear of this idea? An ounce of gold could buy you a fine toga in ancient Rome, and it can buy you a fine suit or dress today. Maybe that’s why precious metals like gold, silver, and platinum are other popular options for inflation-resistant assets. Historically, precious metals hold value even when the purchasing power of cash diminishes. This makes them particularly attractive to conservative investors.

With a Self-Directed IRA, you have the freedom to invest in these metals directly. And as we’ve seen in recent years, the prices of precious metals have hedged against inflation, driving up metals prices and, in turn, the value of assets associated with gold and silver. For investors with exposure to precious metals, gold has indeed proved a successful store of value.

Investing in Inflation-Resistant Commodities

Besides precious metals, other commodities—like oil, natural gas, and agricultural products—tend to perform well during periods of high inflation. As inflation increases, so does the cost of raw materials, which often leads to higher commodity prices. Self-Directed IRAs give you the flexibility to invest in these commodities directly or through specialized ETFs (exchange-traded funds) and mutual funds. It’s a simple way to add diversification to your retirement, especially if you find that traditional brokers don’t give you all the options you’d prefer.

Private Lending as a Fixed Income Solution

High inflation often leads to higher interest rates. That can benefit those invested on the lending side of things. With a Self-Directed IRA, you can issue loans to individuals or businesses, setting the interest rate yourself. If there’s high inflation, higher interest rates on private loans can provide a consistent and sometimes substantial return. That’s especially true if the loan terms are structured favorably. However, private lending carries risks—particularly if the borrower defaults. That’s why thorough vetting and risk management are essential.

Inflation-Protected Bonds and TIPS

Treasury Inflation-Protected Securities (TIPS) are government bonds specifically designed to shield investors from inflation. TIPS adjust with the Consumer Price Index (CPI). This means their value rises with inflation, providing a stable return that helps preserve purchasing power. While TIPS are not as flexible as other investments you might hold in a Self-Directed IRA, they offer a lower-risk option for if you’ve got a particularly conservative approach to investing and want to maintain your purchasing power.

Alternative Investments in the Private Sector

In addition to stocks and bonds, Self-Directed IRAs allow for investments in private companies or startups. When there’s high inflation, some businesses—such as those in essential sectors like healthcare or utilities—may thrive, offering potential for outstanding growth that outpaces the public stock market.

Of course, no investment is guaranteed to outperform inflation. When you use a Self-Directed IRA, you have to make your own decisions. But if you’re confident in your ability to protect your assets from inflation, an IRA is the tax-protected strategy that can help.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.