Self Directed IRA, The Way to Diversify Your Retirement Portfolio

Diversify Your Retirement

Self directed IRAs and 401ks only account for a minimal percentage of all the retirement accounts in the U.S. because they are not nearly as known as 401ks and IRAs. There are many people that aren't utilizing self directed IRAs that could really benefit from them. Why should you open up a self directed account? What are the benefits?

Many retirement professionals push that a diversified retirement portfolio is crucial. This is very true. The diversification ensures to some degree that if one investment option goes bad you still have your other investments.

Traditionally retirement accounts were diversified by investing through the purchase of stocks and bonds. While this is one way of diversifying you may not be comfortable with your retirement in stocks and may want more options. The greatest way to have more investment options through an IRA or 401k is if you self direct those accounts. This is because self directed 401ks and self directed IRAs allow you to invest in non-traditional investments that regular IRAs and 401ks do not. To learn more about self directed IRAs and 401ks please refer to this blog –> The Benefits of a Self Directed IRA

There are many ways self directed IRAs can diversify your portfolio. Here are a couple of the ways.

Market Volatility

One of the biggest things a self directed IRA allows you to do is invest in something other than the market. The market is very volatile. We have seen it go up and down in strides. Having all of your money in the market is not wise. If the market crashes or drops in huge strides like it did in 2008 you could loose the majority of your retirement. Typically when one market crashes, others soar. Making sure that you have that you are invested in multiple markets can ensure that your retirement will not be depleted when one investment goes bad.

Retirement Income

Having retirement income from multiple sources is just another safeguard. When you are retiring you may not like the idea of totally relying on the dividends produced by stocks and bonds or other traditional investment. Retirement income can be diversified in a self directed IRA because you can purchase a rental property, gold and other investments to fuel you through retirement.

Inflation

Many times when investing for our retirement we forget to think about the old bugger that can really hurt our retirement, inflation. Alternative assists can really help protect funds against inflation. One of the greatest protections against inflation is invest in gold or other precious metals with your self directed IRA. Real estate is another powerful investment to help protect against inflation. Typically when the power of the dollar decreases, gold and real estate tend to increase. This is another great way to diversify your retirement.

As we have discussed, a self directed IRA can truly help diversify your retirement portfolio. You are given the opportunity to invest in much more with a self directed IRA. Another great thing about a self directed IRA is that you don't have to think of it as your only retirement option. You can have a self directed IRA along with a regular IRA and 401k. This type of a strategy is a very solid one. As it ensures your diversification. I would would also like to mention that all the basic principles of the self directed IRA that have been discussed here apply to a self directed 401k as well.

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