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Give Your Retirement Plan Some TLC and Reap the Benefits

Published on February 9, 2016

self directed IRA plans

self directed IRA plans

The stock market took investors on a wild ride in earlier this year that left many wondering how to protect their futures against these crazy ups and downs.

Chances are, if you do not have a self-directed retirement plan, you are more vulnerable to market meltdowns. When you self-direct your IRA or other retirement plan, you are taking control of your retirement savings, not waiting for stock brokers and financial institutions to make decisions that affect your future, or remain dependent on the typical investments they are able to sell.

Regardless of whether you are working with a financial planner or making your own investment decisions, you are well served to keep these strategies in mind when it comes to the market to show your IRA a little love.

Dollar Cost Averaging

Dollar cost averaging is fairly easy and something we should all do; it’s simply contributing a fixed amount of money into a retirement account. That way, when stock values dip, as they often do, your contribution buys more shares for less money. Determine a monthly amount you can afford to put away in your Traditional or Roth IRA, and continue to grow your account’s value on a steady basis.

If you have an employer-based 401(k) account, you might already be employing dollar cost averaging through a plan that invests on a consistent basis. Either way, through dollar cost averaging, you’ll have an investment plan that takes advantage of market selloffs and enables you to participate in strong markets as well.

Target-Date Funds

Target-date funds shift their concentration over time. The investing time line might start out with your account being heavily invested in stocks and, as you approach retirement age, shift to less volatile assets (such as bonds). This gives you a cushion to recoup any potential losses in a shorter window of time. Boring but good for investors who are averse to risk. Whether you are working with a financial planner/brokerage firm or buying these funds on your own, be sure to understand the balance between stocks and bonds, since not all target-date funds are the same. You should also understand your options in terms of stocks vs. bonds, investment timeline, and your retirement horizon. Maybe you’ll be satisfied and comfortable with a 50-50 split between stocks and bonds at an advanced age, maybe not. Also research the interest rates associated with these funds.

Keeping Pace with Living Costs

Many Americans worry that their retirement savings won’t be enough to maintain the desired lifestyle they want after they stop working. Therefore, take a look at what you’ll have from savings combined with sources of guaranteed income (such as a pension).

However, with corporate pensions disappearing and Social Security perennially endangered, that guaranteed income might be hard to come by when it’s time for your retirement. So how to keep up with your living expenses?

One way savvy investors prepare is through a self-directed retirement plan. They can include many alternative assets in these plans, far more than stocks and bonds. These nontraditional investments have the potential to build up more lucrative retirement savings—and certainly more eclectic plans—without being reliant on the same old-same old. For example:

  • Are you an ace researcher when it comes to alternative investments? If so, you might want to apply those skills to a self-directed retirement plan.
  • Are you already making real estate investments outside of your existing IRA? Why not make them in a self-directed IRA and grow your savings that way?
  • Are you comfortable setting up the terms of a loan with someone? You can have your self-directed retirement plan make the loan and earn that interest.
  • Have you always dreamed of investing in a cash crop or precious metals? Did you know you can include those investments in your self-directed retirement plan as well?

Next Generation Trust Services makes it easy to get started with some TLC of our own. Our Starter Kits and online tools help self-directed investors open their accounts and make their transactions as expediently as possible.


Have a question about your account?

Contact our helpful self-direction professionals at (888) 857-8058 or Info@NextGenerationTrust.com, read our white papers, or peruse our blog for helpful tips and retirement TLC.