As a result of the recent downgrade of the United States credit rating by S&P and the downward moving stock market, Americans must now be wary of investing all their retirement assets in the U.S. financial markets. The 2008 financial crisis has taught most of us the hard lesson that trusting Wall Street with all are hard earned retirement assets is not always the smartest move. Notwithstanding the fact that many Americans have seen their retirement portfolio rebound to levels close to where they were in 2008, the recent meltdown in the financial markets offer a reminder that retirement asset diversification is crucial to maintaining a healthy and growing retirement portfolio.
With a growing number of financial experts expecting higher interest rates and lower stock market returns over the next several years, no longer is allocating all ones retirement assets to Wall Street investments believed to be a sound financial decision.
While the immediate impact of S&P’s decision to strip the U.S. of its sterling AAA credit rating for the first time and lower it one notch to AA+ is not clear, what is clear is that the downgrade will put mounting pressure on the United States financial markets as well as the U.S. dollar.
With a self directed IRA with checkbook control, an investor would be able to use retirement funds to make domestic or foreign real estate, precious metals, tax liens, foreign currency, and many other investments tax-free and without custodian consent! With a self-directed IRA, IRA or 401(k) assets are transferred or rolled over tax-free to a IRA custodian who permits these types of investments. A special purpose limited liability is formed, which will be owned by the IRA (care of the custodian) and managed by the IRA holder (you). The investor, as manage of the IRA LLC, then has the ability to make the real estate or other investment tax-free and without custodian consent. Using a self-directed IRA LLC, the IRA holder would be able to re-allocate his or her retirement portfolio into different asset classes, such as real estate or foreign currency, which may prove more resilient against a United States financial or debt crisis. In addition, the purchase of foreign assets and/or precious metals would likely help shield ones retirement assets against a falling U.S. dollar. In a time where the financial and economic stability of the United States is at question, the self directed IRA offers retirement investors with a level of asset diversification and far greater of control of his or her retirement investments.