For most Americans, retirement planning is little more than signing up for the corporate 401(k) and contributing just enough to max out the company match. Unfortunately, this “contribute and coast” approach is woefully insufficient for the financial demands of retirement. Effective retirement planning requires regular reassessment to make sure your investments are aligned with your goals, and that you are shifting your assets as the financial landscape evolves.
With that in mind, there are a few key strategies you should be aware of that you can use to supercharge your retirement strategy this year. As you’ll soon see, retirement planning doesn’t have to be boring or take a huge investment of time because there are exciting new options available that are easy to implement…
Tip 1: Commit to further diversifying your retirement portfolio
Diversification is a powerful strategy for maximizing growth without exposing yourself to unnecessary risk. For example, a common way to diversify is to invest your retirement savings into multiple different mutual funds: some for growth, some for income, etc. It is important to rebalance your portfolio quarterly if you want to maintain that diversification because it’s easy for the growth portion of your retirement account to grow faster and begin to “dominate” a large percentage of your account.
But, if your only diversification is different types of mutual funds in the stock market, then you may be exposing yourself to unnecessary risk and missing out on some of the best opportunities available to you. At least some of your retirement assets should reside outside Wall Street and reflect what the assets of the future could be. And right now, cryptocurrencies represent that new frontier.
By moving even a small amount of your retirement funds outside the stock market and into cryptocurrencies, you can diversify your nest egg while tapping into both the safety that comes with investment variety and the tremendous growth potential digital assets represent.
Tip 2: Seek out opportunities for tax-deferred growth
The government rarely lets you get away without paying taxes on your income immediately, so it’s a no-brainer to leverage those few opportunities you do have for tax-deferred growth. The most popular tax-deferred vehicles include:
- Roth IRA
For the majority of these plans, most of the options presented are funds directly connected to the stock market. And while stocks have been on a tear, their gains still can’t compare with those of cryptocurrencies. In 2017, the value of major cryptocurrencies multiplied at truly incredible rates. Bitcoin gained 1,537%… Ethereum gained 8,413%… and Litecoin gained 7,916%… all in less than 12 months.
Can you imagine how powerful it would be if you could harness that growth and let it compound tax-deferred?
Tip 3: Read up on new asset classes
Whether you’re prepared or not, the future is coming. So instead of sticking your head in the sand, it’s best to educate yourself and always be ready to take advantage of new opportunities. For many decades, the primary asset classes available in tax-deferred accounts have been stocks, bonds, and cash. It’s not often that new asset classes emerge. But occasionally they do.
An example: Real Estate Investment Trusts, or REITs, first became a legal investment option in 1960, but didn’t really become popular until the 1990s. Since then, many have profited greatly from the higher dividends typically paid out by REITs. Of course, these days REITs are a relatively common and well-known asset class. But this same pattern plays out with many different investments. The early movers reap the biggest rewards while the latecomers profit little or not at all.
That’s why it’s critical for you to understand any new asset class that crops up. If it’s promising, it’s best to get in early. Today, cryptocurrencies represent one of the newest, fastest growing and best-performing asset classes in the world.
Tip 4: Explore the benefits of self-directed IRAs
Most people don’t realize that they don’t have to let the big banks dictate their investment options for retirement. In fact, you can unlock a whole new world of investments by opening a Self-Directed IRA. What exactly is a Self-Directed IRA? It’s a specific type of IRA that allows you to invest in alternative investments while still benefiting from tax-deferred growth.
With a Self-Directed IRA, you grab direct control of your financial future and open up your retirement to many different asset classes. For example, you can invest in certain types of precious metals, tax lien certificates, artwork, real estate, and even cryptocurrencies like Bitcoin – all from within a Self-Directed IRA. The best part is that all of these assets can grow and compound tax-deferred for decades.
Tip 5: Rollover your old 401(k)
Do you have an old 401(k) account from a previous employer? You don’t want to let it rot there, especially when there are so many exciting investment opportunities that are ripe for the picking. But, before you roll over your account into another 401(k) or conventional IRA, consider rolling it over into a Self-Directed IRA. Not only does your retirement account retain its tax-deferred status, with no penalties or negative tax implications, but you also can access a wide variety of alternative investments.
Here’s what this means: It’s now possible to leverage an old 401(k) to capitalize on the spectacular potential presented by new asset classes like cryptocurrencies. In 2017, the Dow Jones increased by 24.4 percent. Why settle for that when you could have seen a 1,537 percent gain from Bitcoin in the same tax-deferred environment?
Putting it all together
Retirement planning shouldn’t be passive. Engaged investors stand to reap the biggest rewards. Commit to further diversifying your portfolio, seek out opportunities for tax-deferred growth, read up on new asset classes, look into the benefits of self-directed IRAs and consider rolling over your old 401(k). Acting on these five tips in the next 30 days could supercharge your retirement and make a huge difference in how fast your retirement nest egg grows both now and in the future.