A wise person once said – it’s never too early to plan your retirement. Today, when everyone thinks of early retirement as the ultimate goal, creating a diverse investment portfolio is more crucial than ever. It also means if an early retirement or financial freedom is something you wish for, you need to lay the groundwork for it now.
But how can you accomplish this? Surely, more than conventional investment strategies are necessary for your early retirement; otherwise, everyone would do it. You need to invest in non-traditional assets that diversify your retirement portfolio and prepare you for an early retirement. Here, we discuss some of the best non-traditional investment options for diversifying your retirement portfolio.
Top 7 Non-traditional Assets for a Diverse Retirement Portfolio
Real estate is one of the best and most secure non-traditional investment assets to invest your money. Yes, it is an old-school move, but the fact that real estate continues to be a sought-after investment option speaks for itself. You can generate returns in several ways, including rent and REITs (Real Estate Investment Trusts).
Of course, you must do your research before investing in real estate. It means assessing the present and potential market value of the property. Moreover, you also need to keep track of the paper trail to ensure the genuineness of the transaction. You can minimize the risks in real estate investments using self-directed IRA services.
Precious metals are another promising non-traditional investment asset you must consider for diversifying your retirement portfolio. Whether it is Gold, Silver, or any other precious metal, their value rarely depreciates in the long run. Hence, investing in precious metals could make all the difference in a sticky financial situation.
Investing in a non-traditional asset like precious metal protects you against a fluctuating economy, devaluation of currency, and inflation. Moreover, selling off precious metals is also relatively easy, and buyers are always willing to pay good money for it. It is also worth noting that investing in precious metals is now possible through self-directed IRAs, making the investment option much more convenient.
Private Equity and Venture Capital
You must recognize the role of private equity and venture capital if you are serious about generating enough wealth to support your retirement dreams. By investing in leading private companies, not only can you diversify your investment portfolio but also create a significant revenue stream. However, you must familiarize yourself with the finer details, including the risks of private equity and venture capital investments.
For instance, private equity and venture capital investments have significantly more extended lock-up periods. And even though these types of investments offer a substantially higher growth potential, the associated risks are equally significant in magnitude. Compared to traditional public markets, the growth potential in the private market is considerably higher, making it an essential non-traditional asset for a diverse portfolio.
Collectibles and Other Tangible Assets
You could turn your passion for art and antiques into a legitimate investment plan. Whether it is paintings, vintage cars, or rare coins, you can use them all to build a diverse retirement portfolio. The best thing about such investments is that the passion inside you will fuel you to find potential investment options while fueling your inner desires.
Even if you are not particularly interested in collectibles and other tangible assets, they can still help you in a difficult financial situation. Of course, you can not create a steady income from such investments. Nonetheless, the value of collectibles and tangible assets can increase significantly over time, and in the meantime, you can enjoy owning or even show them off.
Agriculture and Farmland
If one of the goals of diversifying your retirement portfolio is generating a steady income, consider investing in farmland and agriculture. It is one of the best ways to develop long-term capital appreciation and has a significant growth potential. Think about it. The population is increasing steadily worldwide, and each mouth needs to feed itself.
Whether or not you consider it an old-school investment avenue, its potential is undeniable. The need for food security is steadily rising, making farmland or agriculture investments one of the most compelling non-traditional investment options.
Cryptocurrency is one of the modern non-traditional investment avenues to consider for diversifying your retirement portfolio. As you know, cryptocurrencies like Bitcoin and Ethereum have become tremendously popular recently. A significant reason for the growing popularity of cryptocurrencies is their potential for high returns.
Of course, that also means cryptocurrencies have significantly higher volatility. Investing in cryptocurrencies is a good strategy for retirement portfolio diversification and can provide you with a hedge against the fluctuating economy. In other words, you should look at them more as something with a digital store value rather than making them your primary asset.
Renewable Energy Projects
Another potential investment avenue to consider for diversifying your retirement portfolio is renewable energy projects. With global warming on the rise and countries investing in renewable energy projects, it is high time you get a piece of the cake. As the new world shifts to renewable energy, you can participate by investing in these projects.
Whether it is solar power plants, windmills, or any other sustainable energy projects, they present a unique investment opportunity. Besides the many financial rewards of investing in such projects, including tax advantages, it lets you be environmentally responsible. In other words, being a part of renewable energy projects enables you to take a moral high ground with your investments.
What is the Best Way to Invest in Non-traditional Assets?
There are several ways you can invest in different non-traditional investment assets. However, a self-directed IRA is the best and most secure way to make these investments. A self-directed IRA is significantly different from your standard retirement account.
An Individual Retirement Account (IRA) lets you invest in various non-traditional assets. You can use self-directed IRAs to invest in real estate, private equity, and cryptocurrencies. And since it is an IRA, you can get almost all the benefits of a standard IRA, including tax advantages.
Besides the various investment options, superior security, and investment portfolio diversification, it lets you pool your investments and manage them centrally using your self-directed IRA.