Market Volatility Has Investors Wary Of Any Corporate Investment
In 2005, private stock investments accounted for almost 7 percent of all self-directed IRA investments, according to Guidant Financial Group, a leading provider of self-directed IRA services.
In a recent 2008 survey, however, Guidant found that only 1.2 percent of its self-directed IRA clients were actively investing in private stock, showing an 82.6 percent decrease in activity in three years.
“The volatility in the economy and the securities market has made investors wary of corporate investments, whether public or private,” explains Guidant’s CEO, David Nilssen. “Once investors grow more comfortable with nontraditional investments, like real estate and tax liens, they start to move away from corporate investments toward other assets they consider potentially more secure and lucrative.”
With the decrease in private stock investment comes several significant investment increases in other assets. In the same three-year time period, self-directed IRA investors increased their investments in tax liens by 341.1 percent, in private loans and notes by 131.1 percent, and in real estate by 24 percent.
“These increases show us that self-directed investors are diversifying their investments,” explains Nilssen. “If the volatility in the stock market has taught us anything, it has taught us to avoid putting all our eggs in one basket. Even those already diversifying beyond the market into alternative investments are no longer buying just one property or solely investing in tax liens.”
