Finding a good retirement plan is one of the most important financial decisions a person will ever make. Sadly, most people trust popular options, 401ks and traditional IRAs, for a lack of better understanding. This wisdom of crowds attitude sometimes deprives them of more profitable investment options they could take advantage of. Options such as REITs and new models like fractional ownership can earn any non-accredited investor a much more profitable, accessible, and liquid retirement plan.
As explained by the Wall Street Journal, 401k plans started in the 1980s as sponsored retirement savings plans. Employers chose to match their employees’ salary-deducted contributions in a mutual fund instead of paying pensions. These had become too expensive to maintain.
Over time, many retirees have realized that locking away their money, with limited opportunities, is not always what’s most convenient for them. First of all, there are many requirements and rules that restrict them from making withdrawals before a certain age. Second, their money is left in the hands of mutual fund managers who decide which bonds and stocks to invest in. All while it is known that index fund ETFs perform better in the long-term than most mutual funds available to 401k plans.
These are some of the reasons why alternative options for retirement are more viable for many modern-day workers and non-accredited investors. Options without lock-in periods, high administrative costs, nor complicated tax operations. While not everybody is ready to trade stocks, bonds, futures or options on their own, there are some accessible investment strategies that don’t require a strong financial background.
Real Estate Investment Trusts (REITs) offer great opportunities to buy shares in real estate portfolios. Despite being low-growth, these offer important advantages such as high liquidity and stable performance. Over 80 million U.S. investors already own these as part of their retirement, according to recent estimates.
The 2012 JOBS act allowed retail investors to participate in crowdfunding. Now they can purchase equity in startups and small businesses for amounts as low as $1,000. Aside from a low barrier to entry, these crowdfunding opportunities can yield high returns if a given company undergoes a successful IPO. This strategy might be riskier than an IRA approach but is regarded as a healthy strategy for diversification.
New technologies are creating new financial instruments. A recent survey found that nearly half of all online investors would like to include cryptoassets in their 401k plans. This is because blockchain-backed assets such as security tokens are opening doors that were previously unavailable to individual investors. Via digital securities or security tokens, anybody can buy small percentages of previously illiquid, hard to sell and hard to own assets. This concept of fractional ownership is already taking the several industries by storm.
These options are also readily accessible. There are existing companies that are dedicated to making them available online to any interested party. Startups such as BRITE are bridging the gap between traditional finance and alternative investment models.
BRITE is a crowdinvesting platform that is different from other services because it’s built on a private blockchain. A move to safeguard users against volatility and privacy issues. Once there, retail investors can take advantage of strategies like REITs, crowdfunding, and fractional ownership in a way that is both secure and simple. All in full compliance with SEC regulations.
All in all, a 401k is not the only plan available for anyone’s retirement. Services like these give workers a wider array of options when planning for it. Options that are far more liquid and profitable than a 401k and might be a good diversification strategy, at the very least.