Posts Tagged ‘alternative investments’

Shaping Your Investment Portfolio for 2018

Tuesday, December 26th, 2017

We enter 2018 in the midst of what has been reported as the second-longest running bull market ever. Accordingly, many investors are wondering how they should adjust their investment strategies. After all, given the age of the bull market and the high equity valuations it has produced, it would not be surprising to see it turn in a more bearish direction.

A CNBC report highlights the trend toward passive investment and away from actively managed funds. While passive index fund investment has always been a good way to collect gains as the overall economy grows, the strategy has been particularly effective in these recent years of high correlations (the tendencies of stocks to rise or fall in sync). As correlations fall, however, active management may make a comeback.

Don’t pay attention to the panic

While there is some expectation that current valuations will eventually have to lead to corrections and lower expectations, it is not necessarily inevitable that this is the case. For one thing, conditions such as “an oncoming recession, a hostile Fed, dangerous inflation, investor exuberance, speculative valuations, or a geopolitical shock” that predict declines do not appear on the horizon. Accordingly, the typical duration of past bull markets do not have to be seen as absolute limits on this or future markets.

Take heed of the GOP tax bill

The tax reform bill expected from President Trump and the Republican Congress is likely to have benefits for stock investors. This legislation has left existing rules for both traditional and Roth IRAs as well as 401(k) plans largely intact. Roth IRAs, which allow after-tax dollars to be contributed toward future tax-free earnings, may become more attractive due to lower overall income tax rates. Moreover, the planned corporate tax cuts obviously constitute projected boosts for business profitability and valuation.

The bottom line from these considerations is that there is good reason to blend both passive and active investments in your portfolio. Passive investments remain viable options, especially for new and long-term investors, and they will continue to provide broad market exposure. However, it is perhaps wise to consider adding some active management back into your strategy as we are likely entering a period when gains will not be shared as broadly across the market as they have been in recent years.

Get diversified

Diversification remains a staple of investment, and investors may want to consider working a self-directed IRA into their investment portfolio. A self-directed IRA allows investors to get the benefits of an IRA with investments outside of stocks and bonds. Allowable alternate investments include real estate, private tax liens, precious metals like gold and silver, lending notes, and even cryptocurrency. Protecting your money means getting strategic about where it’s invested, and having a say in what assets are in your investment portfolio is up to you in 2018.

While pending tax reform may end up being a drag on it, real estate, according to Investopedia, remains a good way to balance out the volatility of the stock market. Tellingly, the wealthiest investors tend to include real estate in their own investment portfolio.

What Alternative Investment Asset Types are for you?

Monday, September 4th, 2017

When most people think of investing, they might think of the stock market. Some people may even think of stocks AND bonds. All in all, most think of something that’s inaccessible to them, and that only the professionals can dabble in.

Owning an alternative investment can be a way to diversify a portfolio because they are non-correlated assets to most other assets. These types of assets are also commonly invested using a self-directed IRA. Let’s go over a handful of our favorites.

Real estate

The range of types of real estate you can invest in is wide. Most will automatically think of either single family homes or commercial real estate, but it goes beyond that. To name a couple, raw land, apartment complexes, farmland, storefronts, storage units, and many, many more.

Private placements

Simply put, a private placement is an offering of a company’s securities that is not registered with the SEC (Securities and Exchange Commission), and is not offered publicly for purchase. Only a few select individuals are offered private placements, so they’re difficult to find in that regard.

Precious metals

The reason that gold, silver, platinum, and palladium are considered precious metals is because they’re rare. Their value is intrinsically tied to their rarity, and in turn, is tied to how they’re priced.  Investors hold precious metals as an alternative investment and to, ideally, hedge against inflation and financial turmoil.