The FOMC – Federal Open Market Committee just completed their most recent meeting. They decided to leave interest rates at historic lows. In prior missives we discussed the downsides and negative economic impacts of these low rate.
Without re-visiting prior articles, the downsides of such a continued policy is that retirees cannot move funds into safe havens an earn enough risk free interest to properly support their retirement incomes. Also, extremely low rates actually become disincentive for investing. This is primarily due to the fact that people with money and projects start doing the analysis of investment projects. They see that the economy is going into a double dip recession and therefore they want to sit on the sidelines to wait out the bad times. However, when they look at interest rates, they just opt to hold funds in cash rather than do anything.
What does this mean for your self directed IRA?
First and foremost, people looking for fixed income yields are not going to find any safe sources. People looking to invest in the market are going to continue to experience the same manipulation and volatility. The Fed will look for reasons to boost the banking system and the economy via printing. This all adds up to degradation of the US dollar, a weakening economy and some level of inflation or even hyperinflation.
These threats mean that you need to be assessing your self directed IRA portfolio and insuring that you have properly allocated it. You need to be looking at your traditional IRA portfolio and consider moving out of paper assets that are easily manipulated by Wall Street or Washington and moving into a self directed IRA.
Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.