Stock market volatility is often a worry for many investors, despite the fact that we are told to buckle up and ride the highs and lows for the long haul. But, if your IRA is heavily invested in stocks, it can be hard to protect your retirement wealth in times of stock market volatility. Savvy investors offset market investments using alternative assets that can provide a hedge against the erratic ups and downs of stocks. Things like real estate, hedge funds, gold, and more can help protect and grow your retirement funds in any economic climate.
Like it or not, America’s economy depends on a variety of global factors.
The trade war with China had an impact on the stock market at its onset. And while Trump’s impeachment has yet to cause a crash like some say it may, there are experts predicting it will—even though the stock market is doing better than ever the past few weeks.
However, no matter what your political views are—the battles in our Congress and across the globe can cause erratic highs and lows on the market. Typical financial advice is to hold steady during these times as opposed to dumping all of your stocks. But that does not mean you shouldn’t take steps to protect and grow your retirement funds by using assets that can provide a hedge for your bets on the stock market. Diversity in your retirement portfolio is crucial.
Here’s How to Protect and Grow Your Retirement Funds
Invest in real estate
Real estate assets remain at the top of the list of more secure investments than you’ll find on the market. From multifamily housing and single-family rentals, to commercial property, raw land, and more—real estate has proven to retain value and sustain tough economic environments.
These assets are quirky, but many investors see the potential within the quirkiness. Commodity prices are historically related to inflation as commodities tend to react rapidly to decreasing supply and increasing demand. When the dollar falls or the economy grows, commodities tend to perform well. As trade wars propel inflation, investors looking to hedge can use these assets and leverage their rising costs to protect retirement portfolios from inflation.
Tried and true treasury bonds
While these aren’t exactly the golden egg in terms of ROI, the Treasury’s inflation-protected securities (TIPS) weather stock market storms well. A decline in the economy can trigger lower interest rates which makes them more valuable. And, since they are backed by the Treasury, these investments can offer protection during bankruptcy as a result of a trade war.
Hold gold assets in your IRA
The cost of gold has escalated by 19 percent since the first of the year—a testament to its standing. Gold is highly regarded as a good investment during troubled times, as it has been for hundreds of years. And the fact that China stockpiled 100 tons of gold to cushion the recent trade war’s affects lends even more credibility to that precious metal’s value.
An Easy Way to Invest in Alternative Assets
Investing in alternative assets is not a brand new idea. It’s one strategy people like Warren Buffet and Mitt Romney used to build their own massive fortunes. Using a self-directed IRA makes investing in alternatives easy—because you can choose the assets for your retirement plan instead of being bound to traditional stocks and mutual funds that a typical plan custodian limits you to.
Self-directed retirement plans make it easy to take control of your own retirement funds and investing decisions. You are in charge of choosing investments for your plan—and you have the liberty to pick things you personally know and understand. If you have an existing IRA or old 401(k), you can roll over funds from those accounts into a self-directed plan. Rollovers are not taxable like traditional early withdrawals are, which makes it an easy transaction to perform.
Also, the investments listed above aren’t your only choices. There is an incredibly large pool of alternative assets you can choose from to protect your retirement funds. But this strategy is not limited to times of market volatility, either. Many savvy investors use alternatives to hedge their investments on the market even when the market is performing well.
The article is not meant as investment advice and was written for informational purposes only. If you want to learn more about alternative investments in self-directed retirement plans, contact Advanta IRA today. We welcome the opportunity to speak with you and explain how these plans can strengthen the wealth building potential of your retirement portfolio.