Self-Directing Some of Your Stock Sale Liquidity Can Help Ease Market Losses
In times of stock market turmoil, the strain on investors’ nerves can make the compulsion to sell too strong to resist. In the wake of declining oil prices and COVID-19 stock market fluctuations, many investors are unloading their stocks in a major market sell-off. Although “stay the course” is repeated ad nauseum, you may want to feel like you have control over something and choose to make changes to your investments.
Whatever the reason you may find yourself with some level of liquidity, you can put those funds to good use by investing within a Self-Directed IRA.
A Self-Directed IRA Offers Alternatives to the Volatile Stock Market
As prepared as you may have thought you were, the swiftness of the recent crash has likely highlighted the areas of your investment portfolio that need some adjusting. Whether COVID-19 stock market events have made you gun-shy about stocks, or you want to find investments with return potential that might help you recoup some losses, the alternative options offered by a Self-Directed IRA may be just what you need.
A Self-Directed IRA is a compelling investing vehicle that gives you complete control over your investment decisions. You decide what, when, and in how much to invest based on your current risk and return inclinations. Furthermore, a Self-Directed IRA provides the ability to hold a variety of alternative investments in your account for effective diversification and major ROI potential.
Alternative Investments that Provide Powerful Diversification
Even the least savvy investor is likely familiar with the concept of diversification and the idea that you need an appropriate mix of stocks, bonds, and cash to maintain stability within an investment portfolio. Basic diversification is important, but to really mitigate risk while giving your investments the best chance to thrive you may want to go a step further and branch out into alternative asset classes.
One of the great benefits of a Self-Directed IRA is the robust number of alternative investment options that are typically available. Many of these options have a low correlation to the stock market and thus provide excellent protection against market fluctuations. Additionally, many often bring great returns, particularly to investors with the expertise that enables them to take full advantage.
The most common alternative investments offered within a Self-Directed IRA include:
- Real Estate
- Precious metals
- Private equity
- Debt instruments
Investment Alternatives with Particular Appeal
If you’re seeking investment opportunities outside of the stock market, there are a few options that are capturing the interest of more and more investors.
Multi-Family. An investment in multi-family housing has great potential even in a down market. Multi-family properties supply affordable housing, and renters tend to stay put during hard economic times. Furthermore, investors can always benefit from the steady cash flow provided by rental income. Consider finding more passive investments, including a private placement with a Multi-family Investment Firm.
Private Lending. You can use your Self-Directed IRA to lend some of your retirement funds to other individuals or businesses. You loan funds via a promissory note that has a set rate of return and is either secured by collateral, often real estate, or unsecured, which would generally have a higher interest rate. There are often opportunities for investors during an economic slowdown as real estate prices go down and leveraging goes up.
Start-Ups. In their early stages, start-up businesses aren’t typically publicly traded making it difficult to invest in them with a traditional investment account, but “angel investing” is possible with a Self-Directed IRA. Investing in start-ups has the potential for great returns, assuming you’re knowledgeable about the particular business to which you’re lending capital. During a market slump, many start-ups will have a hard time finding capital, but there will still be enough of them with good fundamentals and early growth that lending some of your IRA’s funds could be a great way to diversify.
iPlanGroup Can Help You Self-Direct Your Investments
A Self-Directed IRA may provide the control you’re searching for during this volatile COVID-19 stock market. With so many alternative investment options available, you may be able to give your retirement funds a place to thrive, and iPlanGroup can help. As an independent administrator, iPlanGroup can help you to get started in a Self-Directed IRA and give you the support and guidance you need to feel comfortable in an uncertain environment.
iPlanGroup provides same day processing, personal client support, and one-on-one IRA strategy sessions, at no additional cost. Our focus is simple: Your needs as an investor. CLICK HERE to schedule your FREE strategy Session or click below to learn more about weathering a stock market crash with alternative investments.