As everyone knows, we are living in a strange time right now. The coronavirus is affecting everyone across the globe. Businesses are closed throughout the country as everyone does his or her part to stop spreading this awful virus. The stock markets have lost all the gains they have made over the last few years. Retirement plan balances are falling like a rock. Now is the time to start thinking about hard assets in your retirement plans.
Yes, stocks have been great up until this year. As we can all attest to, our hard work can disappear in an instant when the markets crash. It’s important to have your 401(k) and IRA assets across many classes to hedge against such a crash. This is why hard assets, such as real estate and precious metals, are important to hold. In the following, we’ll discuss why and how you should invest in hard assets.
What Are Hard Assets?
Hard assets are defined as tangible or physical assets. Essentially, they are something you can see and touch. When you invest in stocks and bonds, you are basically investing in intangible assets. You don’t physically hold the stocks you invest in. You can’t touch those assets. They cannot be seen, aside from numbers on a computer screen.
On the hand, hard assets are something you can physically hold and see. For example, you can visit a real estate project you are invested in. While gold and other precious metals should be kept at a bank or other financial entity, you can go there and pick it up in your hands.
These alternative asset investments are great to hold in one’s retirement plan. The ability to invest in hard assets does wonders for the mind. Imagine investing in a business and driving by and seeing a line out the door. Or, seeing a flip house getting a new roof on it. More importantly, hard assets tend to do better during financial crisis. While the markets are tanking, precious metals are on the rise and real estate can bring a steady income stream.
How Do You Invest in Hard Assets?
If you have an IRA of your own, chances are you didn’t even know you could invest in alternative assets. This is because most financial institutions do not allow it. They do not make money when you invest your IRA funds in real estate and other hard asset classes. Therefore, you need to look at other ways to invest in them. That’s where the Self-Directed IRA comes in. With the right custodian, such as IRA Financial, you can invest in just about anything you want. This is provided that it’s not prohibited by the IRS.
A Self-Directed IRA allows you to invest in traditional, as well as alternative, investments. Many financial service providers offer these types of IRAs. However, only certain providers give you complete control of your investment decisions. For example, if you open a Fidelity Self-Directed IRA, you may be allowed to invest in real estate. But, you will need to ask for permission first to make your investment. This is known as custodian control.
There is a better way though! At IRA Financial, we feel you should be in charge of your investment decisions. This is why we offer a solution, which is called Checkbook Control. With a Checkbook Control Self-Directed IRA, you are in total control of your retirement funds. You never need custodial consent to make an investment. If you find an investment you like, you can write a check or wire funds directly from your account to make it. There are no needless delays or paperwork to invest your hard earned money.
The Best Reason to Do It
You want to invest in hard assets to properly diversify your retirement holdings. Having everything in one asset class, such as stocks, is not wise. Yes, mutual funds and other holdings will help diversify your stocks. There are tons of different classes you can invest in such as small and large businesses, technology and international assets. However, when the markets are in free-fall, nothing is safe.
Although we don’t offer investment advice as to what you should put your money in, we do like to educate people about what is out there. It’s up to you, with the help of an advisor, to decide what types of hard assets you might wish to look at. We can tell you that our investors typically gravitate towards real estate. There is so much that be can be done with it, whether it’s residential or commercial, rentals or fix and flips or crowdfunding projects or multi-unit dwellings.
Moreover, precious metals are big during financial upheaval. Look at price history to see the affect economic uncertainty does to metals. Of course, no one knows how big and how long a crisis may last. The current situation has impacted all hard assets.
Be Prepared
That’s not just a Boy Scout motto. It can be used in all facets of your life, including retirement planning. It’s smart to plan ahead and be prepared for the next economic meltdown. Properly diversifying your portfolio with hard assets is one way to start. It might be too late to do something about this crisis. However, it’s never too late to set things up before the next one.
With an IRA Financial Self-Directed IRA, you are in complete control of your retirement. It’s in your hands to do all the due diligence needed to make sure you’re invested in something you know and trust. Contact an IRA specialist to learn more about how the plan works.
You also learn more about hard assets by looking through our blog, watching our YouTube videos and listening to our podcast!
