If you have a typical IRA, you’re limited to things your investment broker sells and chooses for you. But, if you want more control in these decisions and the opportunity to enhance the earning potential of your retirement account—it may be time to consider a new investing strategy to kick off the new year.
Every time the new year rolls around, most of us make resolutions to make our lives better. Personal and professional goals typically involve happiness, health, and prosperity. While most of us are familiar with ways to achieve happiness and better health, building wealth—especially for retirement—can often be challenging.
Diversification Can Help Build and Protect Wealth
The most critical aspect you need in your retirement portfolio is diversity. As the age-old saying goes, “don’t put all your eggs in one basket.” This is especially important regarding the assets in your portfolio. You need a balance of assets to grow income and also to protect your hard-earned wealth. The stock market is doing great right now, but if you’re totally invested in the market—are you covered if it takes a dive? If not, you definitely need to consider forming a new investing strategy to augment your earning potential.
And, this is where self-directed retirement plans and alternative assets come in as a new investing strategy.
Self-Directed IRAs as an Investing Strategy Create that Diversity
If you aren’t already using a self-directed IRA or other self-directed account, we encourage you to explore the potential these plans present. The only difference between self-directed accounts and a typical retirement account is that you decide what investments you acquire. You are in control of the assets you choose, not an investment broker.
You’re able to invest in things that you personally know and understand—and your choices extend far beyond stocks, bonds, and mutual funds. You have the option to invest in alternative investments, which include just about anything you can imagine. The only assets not allowed in self-directed IRAs are life insurance contracts and collectibles.
Popular Alternative Investments in Self-Directed IRAs
Real estate is the most popular holding. Assets include:
- Rentals and rehabs
- Improved and unimproved land
- Farmland and timberland
- Residential and commercial property
- Tax liens and deeds
Private Lending is a favorite because as the IRA owner, you can essentially “be the bank.” As the lender, you personally vet the borrower and set the terms of the loan. Tax-sheltered income is earned on the interest and deposited into the IRA.
Private equity presents interesting choices for those familiar with these offerings. A recent article in Forbes deems 2018 as the golden age for private equity. We can’t give you advice but we can recommend that you do a little research to decide for yourself. There are some viable opportunities for accredited investors that are worth investigating. Perform your due diligence to see if these assets are a good fit for your portfolio.
Hedge funds are also a choice for many. And, there are many different hedge funds available depending on how you want to invest. This industry has had its ups-and-downs (as all do) but for the most part, experts are seeing this asset class rally, with stock-focused funds seeing some of the most significant gains among the top performs. This article published by Reuters sheds some positive light on how certain classes performed in 2017 and forecast the outlook for this year.
Bitcoin has been an investment in the spotlight for quite some time now. Blockchain technology appears to be here to stay for many reasons, and it is expected to remain solid even if the predicted Bitcoin bubble bursts. But, don’t think that Bitcoin is your only choice if you want to invest in digital currency. There are over 1000 other forms of cryptocurrency available such as Ripple, Litecoin, and Dash. So, if you’re interested, check out how they all rate on the Cryptocurrency Market Capitalizations chart. You can compare their costs and how well each has performed so you can make an educated decision.
Are You Interested in Learning More about Self-Directed Investing?
Midland IRA is a self-directed IRA administrator with years of experience in our industry. We enjoy educating people on the power and control you gain when you choose to self-direct. We believe that the more knowledge you have about the assets in your retirement plan and the choices available to you, the better your chances are of achieving the financial freedom you desire when you retire.
So, if you want to ring in the new year with a new investing strategy, contact us today.