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By: Sean P. Tucker, a Managing Member of Galleon Ventures LLC. If you would like to learn more about principal protected alternative investments, please contact Sean Tucker at 310-310-3568.
IRA & 401(k) Insights
For many investors, the stock market has traditionally been a place to grow their retirement money over the long haul. However, with the internet stock bubble of 2000 and the financial crisis of 2008, many investors who had their money in the broad stock market have seen their retirement accounts either lose value or, in many cases, are worth the same today as they were 11 years ago. Luckily, there are "principal protected investments" in the market place (you just have to know where to find them).Principal protected investments are just that, investments where you cannot lose any of your principal, but in most cases, have an opportunity to generate a positive return over a specified period of time. For example, an investor can invest in an index fund such as the S&P 500, Dow or Nasdaq through a traditional bank, whereby the investor will receive a small share of the upside, say 20%, if the index finishes positive for the year. However, if the index is negative for the year, the investor will simply not lose any of their principal, nor receive any interest on the principal balance.
What is great about the above strategy is an investor may look for these types of principal protected investments that have the highest possible return, in an industry that interests them and they will have fun participating in the investment. This will allow them to sleep at night knowing their principal is protected and then they just wait for the upside payoff, if any.
Finally, in light of what happened in the recent financial crisis of 2008 with scammers such as Bernie Madoff, R. Allen Stanford and others, there are companies that have taken the position of "self-regulating" and maximizing transparency by way of establishing irrevocable trust accounts, where the custodian is a large financial institution with SPIC and FDIC insurance protection. This will create yet more safety for each investor, so that his/her money is only spent on the operations of the business, which mitigates the risk of the company executives misappropriating investor funds.
By educating yourself on principal protected alternative investments in the market, using your self-directed IRA to invest in these companies, you may protect your retirement nest egg, have the potential to make a handsome profit and have fun while doing it.
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