Investing in Alternatives Beyond the Stock Market
The volatility and fluctuation of the stock market is well known and well documented. However, many investors only invest in stocks, mutual funds, or exchange-traded funds (ETFs), which can make down-periods of the market a little stressful.
If you only invest in assets impacted by the stock market – what are referred to as “traditional” investments – you may seek diversification or the opportunity for more control.
Diversification is especially important when your retirement account and future can be negatively impacted by a market downturn.
If you are an investor asking, “What should I invest in outside of the stock market?” here are a few “alternative” assets to consider. Alternative assets typically don’t correlate to the stock market and can help add diversification to your portfolio.
5 Alternative Assets Outside of the Stock Market
1. Real Estate
There are a variety of different real estate investment strategies, but the following are some examples:
- Rental properties
- Real estate partnerships
- Flipping houses
- Mobile homes
- Raw land
- Vacation homes
- Assisted living facilities
2. Precious Metals
Investing in precious metals such as gold or silver can be an option for investors looking for assets outside of the stock market. To learn more about the specifics of investing in precious metals with your retirement account, please read IRC § 408(m).
3. Private Debt
Some examples of private debt, also known as promissory notes, include:
- Private lending
- Hard-money lending
- Mortgage notes
- Corporate debt
- Trust deeds
4. Private Equity
Private equity, or private entity, investing may involve purchasing ownership, or part ownership, in a start-up company. Private equity is considered an alternative investment outside of the stock market. Other examples include:
- Real estate development companies
- Private LLCs
- Private placements
- Other corporations
Investors may find cryptocurrency to be a diversification strategy for their portfolio. Some types of cryptocurrency include:
It’s possible to invest in these assets, as well as many others, with your retirement account if it’s “self-directed.”
With a self-directed account at Equity Trust Company, you have the opportunity to invest in difficult-to-value alternative assets such as real estate, precious metals, private equity, and more in your tax-advantaged account. Additionally, you can invest in traditional assets such as stocks and mutual funds – all through a single custodian.
Interesting in finding out more? Access our 15-Minute Guide to taking control and diversifying beyond the stock market.
Yes, all income generated by an IRA-owned property must return to your IRA. This ensures that you retain the tax-deferred or tax-free status of the investment.
Cash funds can be transferred via check or wire. All other assets are transferred either ACATS or non-ACATS.
A self-directed IRA is technically no different than any other IRA or 401(k). A self-directed IRA is unique because of the investment options available. Most IRAs are used for stocks, bonds, mutual funds and CDs. A self-directed IRA allows those types of investments along with real estate, notes, private placements, and other investment options.
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