By J.P. Dahdah, Founder & CEO of Vantage
When hearing the word “investment,” people tend to think about stocks of publicly listed companies and fixed income, like bonds. But contrary to popular view, there are investment opportunities outside the public market called “alternative assets” that are more suitable for a Self-Directed IRA investors.
Stocks and bonds are what we call “traditional” investments. Stocks are ownership in a business in which the owners can exercise certain rights, such as the right to vote and receive dividends. These are offered in and regulated by the stock exchange. Bonds, on the other hand, are debt instruments that offer a fixed income after a certain date of maturity. Cash and mutual funds are also considered traditional assets. A Self-Directed IRA can invest in all these options.
Non-traditional investments are called “alternative” assets. They encompass a wide variety of investment products such as commodities, private venture capital, hedge funds, precious metals, private notes and real estate.
Why is it important to distinguish?
Investors who want to minimize their risks and increase their potential for high returns should consider a combination of traditional and alternative investments. The low correlation between these two types of assets creates better diversification for a Self-Directed IRA investor who wants to make the most out of their portfolios.
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or ClientService@VantageIRAs.com.