What’s Better for Your Self-Directed IRA (and 401k) – Gold or Real Estate?
A self-directed IRA or self-directed 401k gives you an unrivaled amount of control over what you invest your money in. Two of the most popular types of IRA are the real estate IRA and the gold IRA. This is because they’re both highly flexible and relatively safe assets to hold.
Let’s take a look at both types of asset, so you can better decide which one is right for you.
The Safety of One or the Other
Both assets are technically safe. You can be sure if you forget about them for a couple of years they’ll still be there when you return. Gold is the slightly safer asset, though.
Gold prices are pretty simple to predict, in terms of their general trend. When paper currency is weak and economic troubles are on the horizon, gold goes up in price, and vice-versa.
Your real estate carries a higher risk because of the way house prices can fluctuate. We’ve seen the housing bubble burst back in 2008 and prices collapsed. There’s also the general safety of the asset you have to consider. If you own a home in a location where there’s a high chance of a natural disaster, you’re risking your money.
The Maintenance Costs
Your self-directed IRA will always carry administration costs. You also have to consider the maintenance of your assets. Gold must be stored in a secure and certified location. It can’t be stored at home, for example. Your IRA provider will be able to help you with this.
Gold itself requires no maintenance, other than paying a regular fee for its continued storage and any insurance policies you’ve taken out.
Real estate requires more maintenance. You have to frequently check on the property and react when it’s in need of repair. These maintenance costs can be quite high, especially if it’s hit by a natural disaster.
Active Management
Some investors prefer a different level of involvement with their self-directed IRA or self-directed 401k. Some prefer to leave everything and check on it every so often, whereas others can’t resist getting involved with it on a weekly or daily basis.
If you want to take a position of active management, the best option is real estate. There are so many options available for investing in real estate. You can renovate and flip houses, hold onto them speculatively, or rent them out to give yourself a regular income.
Gold is a stable asset. It’s the long-term trends you need to watch for. Short trading of gold, generally, isn’t done. This is for people who want to invest for the next decade or two with an asset which takes a minimal amount of management.
What’s the Best Option for Me?
Gold is clearly a better foundation for an investment portfolio. It’s a material which will never completely lose its value, unlike paper currency. It’s something which you can rely on to give you some sort of long-term return, and you can easily buy more as and when you please.
Real estate is for the active investor. You can lose money on real estate, but the potential for profit is much greater. You can potentially claim thousands of dollars out of one sweet deal.
It does require some management and knowledge to get started, though.
There’s no reason why you can’t make both of them a part of your investment portfolio. Investing in gold will always serve as the foundation of any strong portfolio, as its one of the strongest assets around. You can always use a portion of your funds to experiment in the real estate market.
By splitting your capital, you’re protecting yourself against a major economic disaster.
Author Bio:
Ashley is a freelance writer and blogger. She writes on a number of different subjects and topics.
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Category: Investing
