When it comes to maximizing long-term returns on savings and investments, most Americans are at a major disadvantage. This comes from both a lack of knowledge and a failure to seek out and use unbiased professional advice. According to a recent survey by Northwestern Mutual, more than half of respondents had no idea where to turn to for accurate financial advice and insights. 1
Moreover, a separate survey shows fewer than half of all Americans use the services of a CPA for financial advice, and other research indicates a stunning 60 percent of those individuals do not feel financial advisors act in the best interest of consumers. 2 This number is remarkable primarily because Americans currently own more than $26 trillion in retirement accounts. 3
Stocks and Bonds Pressure
The reason so many individuals allow themselves to stay uneducated about their investments is the prevalence of relying on stocks, bonds, and a limited number of traditional investment options. Highly compensated sales people at banks, brokerages, and insurance companies sell these stocks and bonds. The majority of these sales are commission-based, and the salespeople are well trained at offering only company-developed products, such as mutual funds and annuities.
These commissions and company priorities work to create an environment where potential investors receive no or very limited information about other financial opportunities. However, many of those same individuals are now seeking higher returns and are dissatisfied with their lack of options.
Alternative Investments
These factors and the past decade of historically low returns on savings are part of a growing trend for individuals to seek out what are called Alternative Investments 4. As Americans learn more about investing they come to appreciate the additional returns and opportunities in such investment classes:
- Real Estate: Real estate can provide long-term gains and potential tax advantages, with some inflation protection. However, it is usually an illiquid investment and often requires exposure to debt.
- Business Ownership: Investing in a business has the potential to produce some of the highest and lowest returns. Plus, it can take a lot of time and work. Starting a part-time business carries less risk, since one can maintain full-time employment elsewhere.
- Gold: Precious metals are considered safe haven investments in times of economic and political turmoil. Gold is especially favored as a hedge against inflation. Although investors in gold do not receive interest or dividend payments, they have the security of long-term appreciations.
Precious Metals IRA
Although gold has been considered a wise investment for centuries, it wasn’t until recently that people could include it in their individual retirement accounts. Since the legalization of the precious metals IRA in 1997, gold has become an increasingly popular alternative investment and tool for diversifying retirement portfolios.
Diversification is a well-proven concept that guides all modern investing. However, far too many individuals think that means just diversifying within certain stocks and bonds. In reality, adding alternative asset classes, such as gold, to a portfolio is a wise way to gain greater long-term appreciation and protection of investment value.