The journey towards retirement can be aong and sometimes bumpy one, and sometimes your portfolio can take a few hits a long the way. Already in 2020, some investors have been shaken by the events surrounding Coronavirus and the toll it’s taken on the market that they’ve already panic sold some of their investments. This is likely an unnecessary and unwise move because recovery is almost certain. But even more so, it’s important to keep the big picture in mind about overall market growth, and long-term investors understand once this troubled start to 2020 is over, great things lie ahead. So how should you stay focused on retirement during this time?
Choose A Good IRA Plan
When you invest in an IRA over a 401(k) or annuity, you are practically in control of your investments. If you want to invest with your money before taxes, you could benefit from a traditional IRA. If you want to invest and not be taxed when you begin your withdrawal, a roth IRA may be better. Plus, a roth IRA has a little more leniency when it comes to annual contribution limits. If you’re going to rollover a 401(k) into an IRA, you will usually need a traditional IRA to do that.
Understand The Risks You Can Handle
Every investment you make outside of bank savings accounts or US Treasury bonds is going to have some risks. As we’ve seen lately, market activity can be affected by many things including the Coronavirus, and you have to be prepared for how your IRA investments might look if things took a major downturn. But if you have the discipline to hang in there during downswings, or if you’re new to the market and see a dip as a buying opportunity, it usually pays off in the long-term.
The Traditional Markets Aren’t The Only Places To Invest
It should be stated that the stocks have practically always been good assets to own because they have survived big crashes before like 1929, 2000 and 2008. Nonetheless, there are times when it may make more sense to buy bonds when interest rates go up. But there are also alternative investments if you want to look in other markets for hard assets for your IRA, although keep in mind the IRS does have specific rules governing these investments. For example, it’s possible to invest in real estate in a self-directed IRA though it cannot be real estate you live in. You can also buy precious metals including a gold or silver-backed IRA if you want assets that are a little more stable and can hedge against inflation. But no matter where you invest, you should own multiple assets and not put all your savings in just one.
Pick A Reputable Investment Custodian
Just as there are many investment options for your IRA depending on what kind you open, there are many IRA custodians out there. There are a few criteria to look for when selecting the right one:
1. Find out if they offer self-directed IRAs
2. Find out how their fees are structured
3. Find out what the minimums are to start investing
The great news is there are investment platforms today that allow investors to open IRAs with less than $100, although investments like physical precious metals and real estate will usually cost more. To minimize the coronavirus risks, just make sure you’re given clear answers about investment terms and broker licensing.
The bottom line is you can get started on retirement savings today and not have to sacrifice your immediate needs. You do need to make sure you can budget appropriately for it so that you don’t have to make an early IRA withdrawal and pay a penalty.