Alternative Investments for Retirement

I feel that when most people think of investments, they think of assets such as stocks, bonds, mutual funds, and CDs. However, there are other kinds of investments you can do. So this brings the question, “what are alternative investments?”

Alternative investments are investments outside of the typical paper assets I listed at the beginning. Alternative investments fall into categories such as:

REAL ESTATE

  • There are many areas of real estate that you can invest in to produce an income.
  • Private investments where you help others to obtain property or start a business and then your income is generated as a portion of the revenue
  • You can purchase a property that is income generating such as commercial or residential rentals where you receive rent from a tenant; or simply sell the property after fixing it up for a profit
  • Another option is owning land. Raw land can be rented for agricultural, lumber, or ranching use or it can be used for development.
  • Real estate is a popular way to generate retirement income if you have the means and the knowledge to do so.
  • You can use cash or your money from your retirement account to purchase or invest in properties and then the income from them can be deposited directly into your IRA account.

PRIVATE EQUITY/PLACEMENT

  • The common type of private placement is investing in private companies, where you use cash or your funds from your IRA to purchase private placement units. The return from the investment can be in royalties or dividends which are deposited into your IRA.
  • You can also invest in energy ventures such as oil and gas and the remediation of them. A company working on oil remediation technology is Vivakor, where they are able to separate oil from sand. There are investment opportunities to fund this technology and the return could be in the form of royalties.
  • There’s also equity owned real estate where you invest in a company that invests in real estate and your earnings would be in the form of dividends.
  • Private placement is an incredibly diverse area to invest in, encompassing a broad range of fields. Overall private placement can appear intimidating when you look at it as a whole but I find it is much easier to find an area you have knowledge of so you can make a more informed investment

HARD ASSETS

  • If you are looking for a more tangible investment, you can use your money or self-directed IRA to purchase precious metals.
  • It is another avenue to secure your retirement because there is always a demand so the value is not going to drop significantly and it is more likely to gain value over time.
  • The value of gold and other precious metals typically goes up when the value of the US dollar drops. This would give you more security as gold prices could move up more during a recession or stock market crash as they have done in the past. It is a way to reduce risk in an uncertain economy and the market tends to fluctuate more during election years.

After detailing these alternative investments the question “now, how do I invest in these?” may arise. Well to do so, you can use your money outside of a retirement account to invest in retirement income generating instruments or simply use a self-directed IRA to invest. A self-directed IRA works similarly to a standard IRA.

  • A self-directed IRA is an IRA account that can be used for alternative investments outside of the typical stocks, bonds, mutual funds, and CDs.
  • You may receive the same tax benefits and advantages of your IRA or 401k, but you also get the added benefit of investment diversification by being able to invest in alternative assets.
  • You are able to roll over from an IRA to a self-directed IRA without any taxes or penalties

Now, all this information may have you asking, “What is the benefit of alternative Investments?”

  • This way you can diversify while managing your risk. Diversification allows for stability since you will have money in multiple markets and they all won’t lose money all at one time.
  • As we have seen time and time again, market volatility due to fundamental events in the markets and government can lead to significant losses unless you prepare with investments in more than one area in case one declines.

After detailing alternative investments, you should have a better understanding of what these investments are and how they can benefit your retirement. The main point is that you have many different categories of investments and you don’t have to limit yourself to one area since diversification is a more secure way to invest. If you are someone who is curious or have any questions about investing in alternative assets, please reach out to us at info@blackstonecommodity.net and one of our representatives will contact you.