More than the quantity of your investments, you also need to ensure that you get the right balance in your portfolio and the best way to do this is by diversifying your assets.
If there’s any lesson to be learned from the crash the stock market went through in the late 1990s, early 2000s, it’s that having all your eggs in one basket can be problematic. The self-directed IRA allows people to diversify into many different assets, but also to be flexible with following the market trends. “We’re seeing a lot of clients pursuing all forms of real estate: residential, commercial, industrial, we’re seeing a significant trend of people going and purchasing real estate.” one advisor said. Many clients choose real estate so that they can have a portion of their retirement funds in a fixed, tangible investment that also has a potential for profit.
Many people who purchase real estate within self-directed IRAs are buying in cash. An added benefit is that the rental income that they’re generating is pure profit back into the IRA, which allows them to have consistent cash flow off of these retirement investments. Not something you see traditionally.
Although popular, real estate is just one of many investment options available to holders of self-directed IRAs. Because of the wide range of investments available, self-directed IRA holders can ensure that their retirement funds are spread across diverse investments and markets, making them more secure.
“We’re seeing a lot of people engaging in lending practices. They’re originating mortgages for homeowners or they’re lending money out to peers for business activity or things of that nature.” An advisor said he also seen a surge in entrepreneurship. “We’re seeing a lot of people buying businesses or franchises.”