Self-directed IRA Strategies for Everyone
One of the best retirement tools you can use when investing in the market is self-directed IRA. Unlike pre-packaged IRA program where a professional manager handles your IRA, a self-directed IRA enables you to quickly identify investment opportunities and get in and out quickly. This is crucial if you’re trying to survive any market meltdown. The problem with professionally managed IRA programs is that you are relying on the expertise of a professional manager. Most professional managers tend to look in terms of diversification. In other words, they have really long timelines, and they try to play the market based on extended timelines. They are not playing the market in terms of quick gains or in terms of maximizing opportunities that can come up. This is especially crucial if you are trying to survive a market meltdown. As horrifying as financial crash may be, it actually carries with it distinctive opportunities. In fact, if you play market correction correctly you can make more money when the market crashes than when the market stabilizes or if the market continues to go on an upward spiral. The reality is that when the market crashes, there’s a lot of volatility, there’s a lot of money to be made when the investments go up and down in rapid succession in value. This is precisely the opportunities you put yourself in when you use self-directed IRA. By maximizing your control over your retirement funds, you can quickly identify opportunities as they appear. Compare them with other alternative investment options and make the appropriate informed decision. Keep the following strategies in mind when trying to use a self-directed IRA for maximum portfolio gains.
Know When the Party is Almost Over
It’s very hard to make money when the market is continuously going up. You can jump on the bandwagon and buy Facebook stock. Unfortunately, you don’t know when Facebook stock will quickly drop. If you hang on to these stocks while the market crashes, all you gains vaporize almost overnight. This applies to blue-chip stocks as well as other technology stocks. That’s the risk you undertake when you play equities. If you want to make money and put yourself in a good position while trying to avoid a market crash, the key is to know when the party is almost over. Key signs involve the following: ridiculous price-earnings ratios. The price-earnings ratios is a ratio arrive when you compare the price of a stock and the earnings of that stock for the quarter or for the year. The bigger the price-earnings ratio, the more overvalue the particular stock is. Another measure you should look at is the number of record highs the market goes through. If the market keeps establishing new record highs, then you know something is up. The price of something doesn’t go up continuously. It will eventually hit a wall. There will eventually be a wake-up call somewhere at some point in time. Another crucial indicator that the market is overbought is when the underlying health of the economy is somewhat discouraging. Look at job numbers. Look at overall GDP growth. Look at credit activity. If you noticed that a lot of the seemingly positive growth of a particular economy is based on borrowing, you know that something bad is going to happen sometime in the future. If most of the economy’s growth is due to credit, this is an indicator that the underlying solid economy is sick. This can only go on for so long. Keep track of the market appreciation. You can even participate in the appreciation as long as you diversify your portfolio. Keep in mind that you can ride some of these short-term gains as long as you exit following a schedule. If you play your cards right, you can ride the market up but position yourself to make quite a bit more money when the market crashes.
Don’t Forget About Inflation
For the longest time, a lot of investors have fallen into the misconception that there is no such thing as inflation anymore. They think that this invisible force that eats up the value of your hard-earned dollar’s purchasing power is pretty much gone. Well, don’t let the low interest rates and low official inflation numbers fool you. A lot of inflation has been shifted into asset bubbles. While the pricing pressures on products haven’t gone away because the underlying economy is weak, don’t think for a second that inflation has completely died. It only takes a major economic shock for the horror of inflation to appear again. Inflation is very real. Inflation is the number-one enemy of your hard-earned dollars. The amount of goods and services that you buy with every dollar continue to go down with each passing year. We’ve been lucky in these past few years where inflation has pretty much remained manageable. It’s anyone’s guess if this trend is new reality or is just a statistical anomaly in the long-term development of inflation. You have to remember, the underlying cause of inflation remains the same. Inflation picks up because governments print money out of thin air. They don’t back paper money up with gold or anything with serious tangible value. Instead, governments like the United States, the European Union, the Japanese government, merely say that this piece of paper is legal tender. In other words, they will back up that paper with more paper. That’s right. Debt backed up with more debt. As you can already tell, the global financial system is like a house of cards, it can only subsist on government promises for so long. This is why you shouldn’t forget about inflation. If the house of cards falls down, inflation is sure to skyrocket. Why? Inflation is a measure of real value. Money is only kept in check if its backed up by real value. If it isn’t backed up with gold, platinum, silver or anything with solid value, there will always be more money in the market than the goods and services that it’s trying to buy. As a result, the price of those goods and services will go up as the supply of money goes up. This is not a mystery. This is economics 101.
Diversify Into Hard Assets
Considering that the global equities market and especially the emerging markets are showing signs of stress and being overbought, it’s a good idea to diversify into hard assets. Hard assets are investments that have real value. Whether we’re talking about industrial demand or usage in terms of collectors value or personal usage, it’s very important to pay attention to hard assets. Hard asset’s value aren’t dictated by government actions. Hard asset’s value aren’t dictated by government fiat. Hard assets have value because they historically have value. We’re talking of course about gold, platinum, silver, palladium and precious metals. These items have value because industries use them as raw materials for finish goods. People the world over also turn to use these materials as the base foundation for jewelry. Jewelry tends to have value because of the design and collectors value of the jewelry itself as well as the base value of the metal that goes into the jewelry. There’s just something about hard assets that ensure that they will be stores of value long into the future. If you have sold-directed IRA, you might want to get into hard assets. Don’t just look at hard assets as a diversification place. While they do have a great job in diversifying your investment portfolio, they also position you to use your self-directed IRA as a spring board to riches to possible opportunities if the market crashes or inflation spikes up in the future. This is the same when converting your 401(k) to gold as well since each are very similar to each other.
There’s Something About Gold
Gold has been valuable since time immemorial. There is something about the rarity of gold as well as its practical uses that make it as a historical store of value. Gold is valuable regardless of where it’s sold. People and cultures from all four corners of the globe view gold as something valuable. There’s something intrinsically valuable about gold that goes beyond language, religion and culture. People from all corners of the globe look at gold in pretty much the same way, they want more of it. Whether people use it for jewelry or as raw material for industrial goods, gold is very much in demand. This is why it’s one of the hardest of hard assets. It’s near-universal appeal as store of value ensures that it’s very easy to buy and it’s very easy to sell. You don’t have to worry about unloading gold when there’s a market crash. You don’t have to worry about selling your gold reserves or gold bullion when inflation picks up. It is very liquid. There are people that will buy your gold at a second’s notice. Also, gold’s value is pretty much uniform. There’s a global market for gold and it’s very easy to look up the price of gold. This is not the same for real estate. It’s not the same for art work. Not only are these alternative investments harder to unload, their prices tend to fluctuate and there’s often differences in terms of prices. If you are looking to diversify your overall investment portfolio, and you have a self-directed IRA, you might want to get into gold. You don’t have to buy gold bullion or gold coins. If you want, you can go into gold EFTs. There are many gold IRAs on the market, you could use your self-directed IRA to buy up EFTs or gold-mining shares.
The Old Standby Silver
Silver is one of the most priced metals on the planet. However, unlike gold, it is also more readily available. Since there is a lot more silver available than gold, silver’s price has often trailed gold. With that said, if you are looking for a highly liquid and accessible investment to include in your self-directed IRA, you might want to take a look at silver. Silver brings many of the gold’s investment benefits to the table. It is highly liquid. It is almost universally accepted as an investment option. It also has many industrial and jewelry uses. Along with gold, it is one of the most universally recognized forms of precious metal investments. With that said, you can’t assume that silver will always cost a fraction of gold. In fact, silver has shown some historical spikes in value from time to time. Keep this in mind. Just because you’re buying silver for your self-directed IRA, doesn’t necessarily mean that you have to reserve a small fraction of your portfolio to silver. There are certain situations where silver value spikes up at a higher percentage than gold. This might be worth your attention when planning out the precious metal component of your self-directed IRA.
Enjoy the Confidence and Reliability of Platinum
There’s a certain reliability that platinum brings to the table. As mentioned above, precious metals are historical stores of value. When the market crashes or there is a general level of economic uncertainty, there is a flight to quality. There is a flight to tried and proven investment options. This is what precious metals metals bring to the table. However, if you’re looking for a precious metal that has a historically higher asset value than gold and silver, platinum is your best bet. Platinum is not a metal that is so exotic that it can fluctuate widely in price. Platinum is a known quantity. People know that platinum is a solid metal, and its price tends to be higher than gold on a long historical timeline. If you are looking to diversify the types of precious metals in your self-directed IRA, you only need to look at platinum. Not only is platinum an expensive metal, it also has a strong industrial demand. Moreover, an increasing number of people prefer platinum jewelry. Not only do they know that it is a great store of value, but it also looks great. It’s a very expensive version of silver. If you are looking for a solid and reliable precious metal to diversify your self-directed IRA’s precious metal component look to platinum.
There are many ways you can survive a market meltdown, you can diversify into real estate, or you can diversify into precious metals, or you can even diversify into artwork. The problem is when you’re using a self-directed IRA, you need to be able to diversify into something that is very liquid. You need to diversify into something that gains value very quickly. In other words, you should look into precious metals. There are many precious metals that you can include in your self-directed IRA. However, when it comes to liquidity as well as solid value, you really can’t go wrong with platinum, gold or silver. Not only can these precious metals help your self-directed IRA retains its value in times of high inflation or in times of market uncertainty, they can also help you gain a staging area for recouping whatever money you lost with the equities portion of your self-directed IRA. When cashing out the precious metal section of your self-directed IRA when the market crashes, you get a lot of cash that you can use to buy up stocks and temporarily depressed equities. You can then ride up these stocks during the inevitable bouncing that the market goes through after a crash. By entering and exiting precious metals as the market recovers, you can actually ride the stock market as it goes up, and as it goes down. With each ride, you make money. This is how you maximize the investment power of your self-directed IRA.