Build your financial future by maximizing your retirement assets

By Patricia Hightower, Road Home Investments LLC

Are you one of a multitude of investors who has recently experienced significant losses in your retirement account as a result of stock market decline? In 2008 Americans were faced with the unthinkable collapse of large investment banks and corporations, combined with diabolical scandals targeting investors. The climate of fear created by scandals like the recent global Ponzi scheme masterminded by rogue Bernie Madoff, has some investors running for the proverbial hills with their nest eggs.

The Recovery Plan

Investors fed up with the shrinking of their retirement accounts and the shortcomings of financial entities entrusted with their livelihood, may want to consider taking control of their financial destiny and start building wealth with a self-directed IRA. The key advantage of the truly self-directed IRA is that the account owner is directly involved in the choosing of IRA assets. A self-directed IRA allows asset classes in both "traditional" investments such as stock, bonds and mutual funds and "non-traditional" investments like real estate (foreign and domestic), mortgages, notes, tax liens, LLCs, private placements and much more.

An increasing number of individuals are discovering the self-directed IRA, an investment vehicle that features the freedom to choose from this array of investment alternatives without being "pigeonholed" with the limitations of traditional stock market investments that brokers and bankers offer for your IRA.

The motive for Wall Street to monopolize your retirement portfolio is based on the steep "commissions" they make selling you their limited menu of financial products. Conversely, a custodian and administrator in charge of a self-directed IRA account will not (or cannot by law) sell you investment advice, financial products or charge commissions - they simply charge an annual fee of anywhere from $100 to $2000 dollars depending on the investment portfolio.

The Power of Diversification

Consider this. Most of us are familiar with the term "diversification" in regards to investing, are we not? Diversification is a concept often explained with the age old saying - "don’t put all your eggs on one basket." Harry Markowitz, thought leader and developer of the Modern Portfolio Theory stated that diversification is the "free lunch of finance."

Yes, it is deemed mission critical to maintain a diversified "mix" of investments in an investment portfolio. And the rather shocking fact is - the retirement portfolios of 96% of American investors currently held in inflexible traditional IRA accounts in banks and brokerage firms simply do not adhere to this traditional wisdom. (Buyer beware: the "self-directed IRA" offered by many banking institutions and brokerages is a "misnomer" - it is a term that implies that the account holder can only "choose" from the "menu" of stocks, bonds and mutual funds offered by the firm or institution.)

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