Since the early 1980s, 401(k) retirement accounts have become quite popular. While they can be great investments, they can be quite vulnerable to the ups and downs of various stock markets when more aggressive investments are chosen. The other side of the coin is not having enough for retirement because of safer investments that pay much smaller dividends.
Here’s a look at five alternatives to 401(k) investments.
Precious Metals
Ever since someone decided precious metals are valuable, they’ve been good investments. Gold, silver, and platinum in particular not only hold their value they are very liquid; meaning they’re easy to sell when the time comes.
Some investments take longer to divest, and if monetary gain is the primary goal, a person could be put into the precarious position of taking less money in order to facilitate a quick sale. Precious metals are valuable and liquid, which translates to a ready marketplace of buyers.
Real Estate
Real estate is an excellent investment and offers a wide range of potentials to meet your financial goals. Undeveloped real estate can be an excellent investment, but it will only be worth as much as someone’s willing to pay for it, and reselling it could take time.
Other investments, like strip malls and apartments generate monthly income, and if managed properly will not only pay off the mortgaged amount, but will also offer a monthly income. Buying a home is generally an excellent investment, and one could reasonably assume it will increase in value over time. A home purchased today will be free and clear in thirty or less years, and can be sold for cash, which in turn can be reinvested and used as you see fit.
Art,Books, Guns, etc.
While a little riskier than other investments, many people choose to invest in art and similar luxury items like expensive rugs, first-edition books, valuable guns, coins, stamps, and the like. Smart investors can find items that will, at a bare minimum, hold their value and will be easy to divest, and frequently find investments that will increase in value over time.
With these types of investments, however, the resale value can be in the eye of the beholder. A $10,000 painting is only worth $10,000 to you as an investment if someone is willing to pay you for it. Future buyers determine the ultimate value of these types of investments.
Individual Stocks and Other Securities
Nearly all 401(k) investments rely on the diversity of mutual funds to hedge against severe losses. Mutual funds are collections of hundreds and even thousands of stocks, which help balance gains and losses. One underperforming stock won’t drag your entire investment down because there are plenty of over-performing stocks to make up for it.
Many investors choose to invest in individual stocks and bonds and other securities, doing their own research. There are tremendous gains to be had from investments in various financial markets, but with a big upside comes risk. If you’re in a position to invest in this style, it could be very rewarding over time, and could ultimately yield a bigger return than a 401(k) or similar investment.
Riskier Investments
As certain as the sun rises in the east and sets in the west, someone will always be looking for money. An entrepreneur with a great business idea, a burgeoning filmmaker with a great script and actors ready to go, a business opportunity suited to your skills or an inventor in need of money for a prototype.
These types of investments are nearly endless, and are at the very heart of a capitalist society. They can be very lucrative, but also very risky. Businesses fail, movies flop, and new inventions are sometimes not embraced. You should enter into these investments with your eyes wide open, and with no misconceptions about their speculative nature.
No matter how you want to invest your money, the best approach is to do it with a certified financial planner on your side. They can guide and direct you based on your short- and long-term goals, and can offer advice on tax planning.
Bottom line: It’s your money, invest it as you see fit!
[author] [author_image timthumb=’on’][/author_image] [author_info]Dwayne Thomas currently writes for cabletv.com. You can find him on Twitter @Dwayne_CableTV.[/author_info] [/author]
