American IRA's Latest Blog Speaks Of Investment Risk In A Self-Directed IRA.

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Many people worry about whether the investment risk increases inside a Self-Directed IRA. This new blog goes into detail about the choices individual investors make and the consequences of those choices.

American IRA CEO

American IRA CEO, Jim Hitt

Jim Hitt, CEO of American IRA, says "Returns, of course, are only part of the investment risk equation. Any prudent investor isn’t going to look only at returns, but also at the Self-Directed IRA risk."

Jim Hitt, CEO of American IRA, says "Returns, of course, are only part of the investment risk equation. Any prudent investor isn’t going to look only at returns, but also at the Self-Directed IRA risk, as well."

The blog states that the amount of Self-Directed IRA risk really depends upon the investment each individual is making. With self-directed investing, the fact is that they are in control of their own destiny as an investor, when it comes to their retirement account. Which means that the risk they take is entirely up to them. A self-directed retirement portfolio is only as risky as the assets they put in it. They can open a self-directed retirement account and invest in things that are extremely risky – much riskier than nearly any conventional mutual fund, for example – or they can choose to invest entirely in investments that are extremely safe, or that are even considered “risk-free” by the investment community. Or, like most, they can stake out their position somewhere in between.

As the blog says, it’s important to keep in mind that there are many different kinds of investment risk. A Self-Directed IRA investment may be risky in one sense and not very risky in another. Here are several important kinds of risks individuals should keep in mind:

Investment risk. Most investors understand this risk quite well, even though they tend to underestimate it. This is the risk that the market value of any given company they are investing in could fall – or even, theoretically, go to zero.

Inflation risk. This risk is directly related to the tendency of the dollar, along with all other currencies – to gradually decline in purchasing power. In a way, it’s the inverse of investment risk, because in practice, if investors try too hard to avoid investment risk, they wind up taking on inflation risk.

Systemic risk. This is risk that affects the whole system, and cannot be diversified away. If stock prices fall at the same time as bond and real estate prices, there’s not much chance of picking the lonely exceptions to the rule. The best way to hedge against systemic risk is to diversify into many different unrelated asset classes.

Regulatory/Legislative risk. This is the risk that Congress could pass a law that makes a given investment less attractive – and therefore causes it to lose value.

Interest rate risk. This is the risk that investments and/or income will be affected by unpredictable changes in prevailing interest rates. For example, bond prices

Click here to read the entire blog.

About American IRA, LLC:

American IRA is committed to providing every client with gold-level service, regardless of account size. Experience their expertise through their certified IRA services professionals. Enjoy the value with one low annual fee of $285 with unlimited assets and unlimited account values. American IRA clients love the benefit of no charge for "All Cash" accounts. The performance of the American IRA staff is unmatched, with quick and efficient processing within 48 hours.

American IRA services thousands of clients and has over $300 million in assets under administration.

American IRA was built by investors for investors, and brings their successful investment experience to the table, providing excellent educational material showing the public that their Self-Directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.

American IRA is conveniently located in Asheville, NC and Charlotte, NC, and serves clients nationwide.

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Sean McKay
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