Advantages of the Alternative Investment Markets (AIM)

The Advantages
Increased Asset DiversificationInvesting IRA assets in these non-traditional investments allows for broader diversification, which helps to offset losses from other investments.

Independence from Market VolatilityUsually, the performance of traditional investments moves with the stock market. But this is typically not the case with non-traditional investments; therefore, they can help to balance the overall performance of the IRA.

Potential for Higher ReturnAs with other investments, the rate of return on alternative forms of investment is not guaranteed. However, many financial professionals project that the rate of return for these investments is usually higher than that for traditional investments.

ConclusionInvesting in these non-traditional asset classes can be tempting for the investor who wants to diversify his or her portfolio. However, as the list above demonstrates, other factors need to be considered. For instance, will the rate of return be enough to offset expenses incurred from UBI taxes and administrative fees charged by the financial institution? Will additional legal expenses apply? You should also remember that, as with other types of investments, the higher the potential return, the higher the risk. And with any form of investment, suitability and risk tolerance must be key determining factors. The investor must engage in serious, in-depth discussions with his or her financial advisor for assistance in making such decisions.