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Stocks And Diversification

Diversifying Stocks
3 Minute Read

There’s a lot to learn about stocks and diversification, and how the knowledge of both can help your portfolio exceed expectations.

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The Stock Market

Almost everyone knows that the Stock Market causes opportunities, can cause immense losses, and also that you can buy and sell parts of companies, known as shares. The floor of the New York Stock Exchange is a frenzied place, and there are exchanges around the world. More information can be found online, but the basic definition works fine.

What does this mean for investors? It means that when one goes to the exchange, they are assured of a fair price because of how the way the whole works. In the Stock Market, there are chances to purchase shares of all kinds of stocks, whether technology, brick and mortar stores, or biotech. But all of that opportunity comes with risks, and these cannot be overlooked.

Diversification

So what can you do to protect yourself from Stock Market mania? From the wild swings that some stocks are subject to? Diversification is the answer. Purchasing power for alternative investments may be stronger than for traditional ones. There are alternative opportunities that can power your portfolio to new heights while providing a cushion against traditional market volatility.

So, what are alternative investments? Alternative investments are assets outside of traditional/conventional markets, such as stocks. Some popular alternative investments include real estate, which is often classed as an alt asset; cryptocurrency and private business/placements are also very popular.

Stocks And Diversification

What do stocks have to do with diversifying your portfolio? It can be complicated, keeping your assets aligned with your vision for the future, as well as making sure you are protected against volatile market upheaval, changes in political party control over the United States, and more.

There can be trouble with portfolio holdings in the stock market in the event of a crash, government filings, and public perception. Diversifying your holdings may help keep your finances heading in a positive direction. What can you invest in when you’re talking about alternative assets?

Real Estate

Investment properties, tax liens, investment in rental homes and apartment buildings, and improvements made to them, can help investments increase in value. This means when the holder hits retirement age they can take more money out to live on.

Cryptocurrency

From Bitcoin to Dogecoin, cryptocurrency is becoming more popular than ever. With limited supply available, the blockchain technology used to maneuver and manipulate cryptos are attracting attention from the public and government overseers alike.

Stock Market Blues

In the world we have, the stocks one buys are a reflection of politics, financial wherewithal, traditional purchasing power, and a look to the future. The power of stocks and diversification means that a portfolio can be covered in the event of emergency, sell-off can be both rapid and illiquid depending on what portion of it has been released. Real estate takes longer to buy and sell, but can provide a solid basis of diversification. Rental properties can provide a steady source of income even at times when there is nothing really changing on the market.

Cryptocurrency has been especially volatile, but could be a good investment depending on what the main idea of the investor is. Holding investments for the long-term means weathering the storms that pass through the market, as well as other places you invest.

So how do you make sure your stocks and diversification are working together? Make sure your portfolio covers many areas. Crypto, real estate, tax liens, stocks, and bonds, mutual funds, raw land, really anything except that which is specifically prohibited by the IRS. Branching out beyond the traditional assets normally recommended by investment leaders can ensure a more stable future for yourself and your retirement.

Self-Directed IRA, Stocks And Diversification

When you open a Self-Directed IRA, you are able to invest in both traditional and alternative assets. The Self-Directed IRA is a retirement account vehicle that is best known for allowing investors to use retirement funds to buy alternative assets, such as real estate. “Self-Directed IRA” is not a term of art and you will not find it anywhere in the Internal Revenue Code (“Code”).  It simply refers to an IRA account which is permitted to be invested in traditional assets, such as stocks, but also alternative assets, such as real estate. One major advantage of investing in alternative assets with a Self-Directed IRA is that all income and gains are tax-deferred until the time when the IRA holder (you) takes a distribution.

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