Whether you’re new to the investing game or a novice, there’s something that everyone needs to learn, and that’s diversification of assets. Diversification is fundamental, not only for your portfolio’s sake, but also for your future retirement’s sake. When you have a self-directed IRA, and the investment options available to you are practically limitless, that’s when you really have to know what you’re doing.
Most regular IRA custodians limit your choices to easy-to-administer paper investments, even though the Internal Revenue Service’s rules give you broad latitude on what you can include in your retirement account.
It’s pretty much seen like this:
- Stocks help your portfolio grow
- Bonds bring in income
- Real estate provides both a hedge against inflation, and it may rise when stocks fall
- Cash gives you and your portfolio security and stability
Don’t box yourself in though, nontraditional investment choices vary from:
- Commercial Real Estate
- Oil and Gas Royalty
Your limits are only set at the IRS rules, which should be practically tattooed into your mind by now.
Investopedia says to know when to get out. Buying and holding and dollar-cost averaging are sound strategies, but just because you have your investments on autopilot does not mean you should ignore the forces at work. Stay current with your investment and remain in tune with overall market conditions. Know what is happening to the companies you invest in.
Learning to invest is rewarding, and really getting into the swing of things, while taking a disciplined approach, and being good at investing is even better. Educating yourself and consulting with others that you trust is imperative to your financial growth and wellness, and if the right steps are taken, you’ll be on your way to a lovely retirement.