IRA Innovations Blog: Building Retirement Wealth

The traditional method of investing can seem limiting to many. Brokers and financial professionals tout the necessity of a diversified portfolio but the options they present don’t often seem that diverse: a range of stocks and bonds. If placing your retirement nest eggs in two (very similar) baskets doesn’t appeal, then the time has come to look into alternative investments.

Investing in alternatives isn’t a new strategy. It has in fact been around since the IRA was created in the 70s. However, it’s popularity in the face of a rapidly changing marketing has risen recently. Alternatives offer investors diversification in ways that a broad range of stocks and bond do not.

The benefit of alternative investments as part of an investor’s diversification strategy is that returns are uncorrelated with traditional investments. Where stocks must weather the ups and downs of the market, alternative investments respond differently to changes in the market. The effects of market fluctuations will still be felt in alternative investments, but often in a more muted way than traditional assets.

What draws many investors to alternative investments is the ability to invest in what they know best. Farmers can invest in livestock, doctors can invest in medical equipment; there are a great many options available. These options are all available to investors looking to increase the return on their retirement investment through a self-directed IRA.

The ability to maintain a strong portfolio resides in diversification. If you’re tired of what’s offered by brokers and banks and are looking to truly diversify, alternative investments are an avenue to consider. Their increased non-correlation with the market makes them a staple in a strong investment portfolio.

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