The Obligation and Opportunity of Self-Direction in a Crazy Market

April 10, 2020

I couldn’t help remembering the last time I felt so helpless – September 11, 2001. The country was frozen – trying to understand the level of hatred it took to plan and execute the death of so many innocent lives. The uniqueness of about sharing a seminal event together as a country is unique – some remember the assassination of President Kennedy in much the same way. 

The next significant event that shook the country was the recession of 2007 – 2009. It seems like a slow drip, drip, drip of bad economic news, and I recall during the first year, having a bit of hope that we just might pull out with just minor damage. Investors reacted in many ways – some holding on, hoping things would recover, and others moving to cash and swearing they would never buy stock again.  

However, September 11th affected me almost immediately. My position in a Chicago based strategy firm for all intents and purposes ended, and I now had to find another way to provide for my family of five. It became personal to me in a way that the recession of 2007, and the current Coronavirus has been for others.

This time, it feels different – the chief cause is not that the economy is failing (that is the result), but that COVID-19 has destroyed our ability to both carry on our usual lives and the commerce that is created by that normalcy. The result is record filings for unemployment and the unfettered desire for the Federal Reserve and Congress to do whatever it takes to mitigate the slide of our GDP to trigger another recession – no matter the future consequences of deficits stacked to the heavens.

Perhaps the only silver lining to all of this economic disruption is that we all in it together, internationally speaking. You would think that our government’s insatiable appetite for spending without regard to fiscal restraint would send the dollar spiraling out of control – au contraire, it is at a 15 year high against the Euro, and has posted near record highs against the Chinese Yuan, the Russian Ruble, and the Mexican Peso, among others. Evidently, to the world as well as for our families, safety (or perceived safety) is always first.

Despite the uncertainty of when the worst will be over, we must move forward; after all, we Americans prefer to be called optimists, especially those that self-direct their investments. Perhaps our clients feel that no matter how bad the economic environment gets; their odds are a little better when they choose to operate in a world of private investments. In any case, we are one day closer to the day we want to retire, if we are not there already – so what is the next move to make in your retirement plan?

I am grateful, first of all, that a self-directed retirement plan means that we have complete control of our investments – not our advisor, or someone to whom we must pay a fee or a commission for their recommendations. Here are a few things that we can do during the uneven days ahead:

• Use the time to learn more about your choices – start with our webinars on our site, we are adding them weekly with new topics and investment types. Augment that with podcasts and other virtual tools, and once the on-line resources are exhausted, check out amazon for publications on alternative investments

• Diversify into one new investment type. Often, we get attached to a type of investment that always seems to perform, but as the downturn has illustrated to many that holding a broader array of asset classes may be good practice.

• Partner – perhaps this may be the way to move into a new class of investment, through learning from someone experienced and who may help reduce your risk. This can be a simple partnership, or within an LLC or other legal structure. This has been a way that I have learned from the best and earned tax-free returns in the process.

• Create a repeatable process on how you find and assess your choices. It may be an e-mail campaign to discover discounted real estate, a way to structure your own private lending guidelines, or a framework to determine the relative risks/rewards of a particular investment.

• Make sure that your investments align with your objectives, whether it is cash flow, equity growth, or even a bit of speculation. It’s all available in the private marketplace as well as in the stock markets.

• Keep momentum going – as you accumulate cash in your account from dividends, rent payments or additional contributions, look for ways to invest smaller amounts through lending, partnering, or adding to existing investments. You are also eligible to invest in publicly traded stocks, bonds, and mutual funds, while you are on the NuView Trust platform.

• Tell your friends and build your own advisor network. Most of us have an informal group of people we bounce ideas off of – and having that group established before you make a big investment decision may resolve questions of legal, tax consequence and investment advisability effectively. An extra benefit of having more friends self-directing their IRAs as well is that it creates a world of partnership possibilities

We are all thinking a bit differently. I have a friend (yes, a Millennial) that continuously recommends that I keep a portion of my cash in Cryptocurrency – and for the first time, I am starting to take this seriously. Precious metals, based on the fragility of world paper currencies, are also starting to make a bit more sense. Investments in basic housing, multifamily and single-family, sustainability, small houses, agriculture and aquaculture, international driven investments, and so much more may be a more rational choice now than pre-COVID-19.

Don’t be discouraged or overwhelmed – saving, planning and self-directing your investments for the rest of your life is a serious undertaking. It’s well worth working on, and whether you want to self-direct a portion of your funds or all of it – you will certainly care about the outcome more than anyone else!

Glen Mather, CEO