Learn More About Your IRA’s Investment Options

Financial assets follow cycles of hot and cold like anything else. This bubble and bust cycle has always existed. The wealthy understand these economic cycles and purchase assets at their lows when they are undervalued.

At times, stock and bonds are very profitable. When adjusted for inflation, they have been flat since about 2000. Wise investors are considering unusual IRA investment options to garner a better rate of return.

 

Zero Interest Rates

Interest rates are supposed to measure risk. From the 1990s, Japan has basically had a zero interest rate policy leading to flat economic growth. Since the financial meltdown in 2008, the Federal Reserve has been lowering interest rates to keep the economy running. The effective interest rate is zero in the United States.

A zero interest rate is used to keep banks afloat. Unfortunately, the rest of an economy is sacrificed in the meantime. Inflation can lead to negative returns in the usual financial investments. Investors need to find alternative investment options to make real money for their IRAs.

Inflation Protection

Rental property remains an option for astute investors. It must be matched with enough liquid assets in the IRA to counterbalance the real estate. People always need housing.

Derivatives are another option to deliver higher returns. Some estimate the entire derivatives market to be worth $1.2 quadrillion. These include options, credit swaps and a variety of “events-based” financial instruments.

An IRA portfolio needs to have protection against inflation. Either high returns or assets that naturally rise with inflation are the best best.

Gold is Always Valuable

Gold has always been valuable. Central banks contain gold bars to represent accumulated wealth. All companies go bankrupt. All currencies vanish. Gold remains through thick and thin.

Wise investors are returning to gold as an investment for their IRAs. The cycle is a circle. After complex banking stocks, bonds and derivatives lose all their value, gold remains as a solid asset.

Bloomberg has reported on the 12 year bull market for gold. Gold mining stocks remain depressed. It takes a lot of capital to extract gold from the ground. This reduces demand and leads to higher prices.

Rare gold coins are appreciated for their beauty and content. These are well-recognized and more difficult to counterfeit. Gold and silver coins are respected throughout the world.

The key advantage of precious metals is the intrinsic value. All have “melt value.” In emergencies, investors can melt them for fast money.

There are a variety of risk versus reward options for IRA investment. These unusual financial instruments offer higher returns and inflation protection. This is a necessity in the modern financial environment.

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