Last Updated on June 8, 2021
Here at IRA Financial, we see a broad range of alternative asset investments. These range from the typical (real estate and precious metals) to the obscure (race horses and dairy cows). As long as it’s not prohibited by the IRS, you can invest in just about anything. Prohibited investments include life insurance, most collectibles and those that involve a disqualified person. By self-directing your retirement plan with a Self-Directed IRA or Solo 401(k) and even a Self-Directed Coverdell ESA or Health Savings Account, you too, can invest in alternate assets. In the following, we’ll talk about the top five investments we see.
Easily the most popular alternate asset investment we see is real estate. Real Estate investments can include commercial spaces, apartments buildings, raw land, fix and flips, etc. From what we have seen, most people who invest in real estate with retirement funds have deep backgrounds in the business. Ever since the housing bust of the mid 2000’s, the real estate market has been, for the most part, a solid investment. Using a self-directed retirement account to invest in real estate is a great way to earn passive income, such as rental income, to build your nest egg. The use of a Real Estate IRA has become one of the most popular ways to invest.
Quite possibly the hallmark of alternative asset investments is precious metals. Everyone knows how valuable gold, silver, platinum and other metals are. They’re generally a safe bet as well. The reason being is that metals are not affected by inflation, they’re easy to convert into cash, they’re the go-to source during financial and political unrest and they can be invested in with ETFs, or exchange traded funds. Further, metals are recognized and accepted all over the world.
More and more people are looking at their retirement funds to invest in themselves. By utilizing IRA Financial’s IRS-approved ROBS solution, you can use your 401(k), IRA or other account funds to invest in your own business. Who doesn’t want to work for themselves? The ROBS solution allows one to rollover current funds into a new 401(k) plan that will be used to fund your business. If you are confident in your ability to start and run your own business, you should look into it. That way, you control your own financial destiny (not the government or big business). Check out our recent article about the Pros and Cons of ROBS!
Hard Money Loans
Hard Money Loans, also known as Peer-to-Peer lending, as become an increasingly popular alternative asset investment. As you may know, traditional loans are becoming harder to obtain. Further, the process can drag on for weeks. Moreover, you need great credit and proof that you can pay off the loan. What if you don’t meet the necessary criteria for a bank loan OR you need your money faster? That’s where a hard money loan comes into effect. One can use his or her retirement funds to lend you the money you need, regardless of credit, in a timely fashion. Generally, these types of loans are used for real estate ventures. The property is then used as collateral for the loan.
Believe it or not, cryptocurrencies are still a quite popular alternative asset investment. The most famous crypto, Bitcoin, has been on a wild ride since its inception. This hasn’t stopped investors’ belief that cryptos are an emerging market. Cryptos are not backed by any bank but instead, use technology as the driving force of digital currency. Obviously, this is the riskiest investment on this list. However, big risks can lead to big rewards. Just ask anyone who invested in Bitcoin early on!
Why Choose Alternative Asset Investments?
There are two main reasons to invest in alternative assets. One, the roller coaster that the Stock Market is. Even though, over the long run, the markets have yielded a consistent return, they’re still quite volatile. Why risk losing most of your savings when the markets do crash! Secondly, diversity. Every expert will agree that you should have a diverse portfolio. Alternative asset investments are instrumental to diversity. Hedge against a recession with precious metals. Earn passive income from a real estate venture. Get paid for lending someone some money. All these can broaden your strategy and create a diversified portfolio.
Do you have any questions about investing in alternative assets? Our experts at IRA Financial can help you understand how they work. While they won’t tell you what to invest in, they’ll make sure you do it right. Contact them today @ 800.472.0646.