Volatile Economy Forces Asset Diversification for Self-Directed IRA Investors
July 29, 2008 // Franchising.com // Bellevue, Wash. - In comparing survey data from 2005 to new data from 2008, Guidant Financial Group has found that self-directed IRA holders have changed their asset allocations dramatically in response to the volatile economy.
In both surveys of Guidant clients, real estate was the most popular investment among self-directed IRA investors. In 2005, 48.3 percent of survey respondents reported investments in real estate, compared to 59.9 percent in 2008. This shows a 24 percent increase in real estate investments over the last three years. Additionally, Guidant clients increased their investments in private notes and loans by 131.1 percent - an investment opportunity that seems to have come into its own thanks to the current economic climate.
The most dramatic increase was seen in tax lien investments. In comparing data from the two surveys, self-directed IRA holders reported a 341.1 percent increase in tax lien investments with IRA funds. According to the 2005 survey, only 1.7 percent of account holders were investing in tax liens, while 7.5 percent were doing so in 2008.
"The increases in investment activity across several opportunities show us that self-directed investors are diversifying their investments," explains David Nilssen, CEO of Guidant Financial Group. "If the volatility in the stock market has taught us anything, it has taught us to avoid putting all our eggs in one basket. Even those already diversifying beyond the market into alternative investments are no longer buying just one property or solely investing in tax liens."
The one investment type that saw a significant decline was private stock placements. This type of investment, in which the investor purchases stock in a privately-held corporation, decreased by 82.8 percent.
"The volatility in the economy and the securities market has made investors wary of any kind of corporate investment," explains Nilssen. "Self-directed IRA holders are finding that investing in nontraditional assets like real estate and tax liens is just as easy as investing in the stock market. Given the recent state of the market, it's not surprising they're turning away from entities over which have no control to alternative investments that allow hands-on supervision."
About Guidant Financial Group
Guidant Financial Group provides investors with safe and innovative options to invest for their retirement futures. Guidant is the premier provider of self-directed IRAs and business funding solutions through an individual's IRAs and 401(k)s. Guidant's services allow investors the freedom to make alternative investments in real estate, franchises, businesses, tax liens and more. For more information on self-directed IRAs or small business financing please visit www.guidantfinancial.com.