For better or worse we now live in a connected global economy; a fact that still comes as a surprise to some U.S. investors.  Historically global economic woes began and ended here, but not anymore.  While this might be a matter of theoretical interest to investors in their twenties and thirties, if you’re saving for retirement, particularly in a 401(k), IRA, 403(b) or other retirement account that limits your agility to respond to market downturns, it’s crucial to know what your options are.

Today we find ourselves in the midst of a stock market correction and near recession at a time when things, at least on the surface, weren’t feeling too bad for the U.S. economy. We didn’t walk into this crisis, as we did in 2008; we were dragged into it by China and a general slowdown throughout the rest of the world. Not that we didn’t have some issues of our own that made our market position more precarious.

Certainly the stock market was overvalued by companies taking advantage of the Fed’s loose money policy. The Fed’s theory behind near-zero interest rate money was that companies could afford to borrow money for expansion and growth.  Unfortunately what happened instead was executives enthusiastically borrowed that “free” money, then used it to buy back their own stock. That inflated their stock prices while saddling their companies with debt—which wasn’t an apparent issue until the Fed finally made good on its ongoing threats to raise interest rates. The rate hike came at the worst possible time and now the market’s letting us know about it.

Stock market performance is, by its nature, a backward-facing metric. The challenges equities face in the new connected global order are significant. While continued investment in equities is still part of the picture, increasingly we’re transitioning into an age where you need a broader diversification of assets outside stocks to defend your portfolio against fast-developing, destructive volatility. This is especially true if you’re nearing retirement. Fortunately, there are still some high quality investments that can be directed to an IRA besides just equities.

Checkbook LLC IRAs

A checkbook or LLC IRA is a company, in the form of an LLC, that’s formed and owned by your self-directed IRA. You’re then provided a business checking account tied to your IRA funds. By electing yourself “Managing Member” of the LLC, you then have access to that checkbook. This strategy is popular among those who want to own investment-grade real estate in an IRA as the LLC can then pay directly for maintenance and repairs.

Gold IRAs

IRS-approved quality gold and silver are another increasingly popular alternative retirement investment. While most alternative investments necessitate setting up a special type of account known as a self-directed IRA, which requires more hands-on administration, so long as you use a provider that offers precious metals you can actually hold gold and silver in a standard IRA, which can save hassles. Gold and silver provide long-term stability and freedom from the race to the bottom on currency valuations so common among central banks today.

This type of investment does come with some requirements, chiefly that the precious metals must be held by an IRS-approved custodian.  Although it might seem appealing to store precious metals held in your IRA at home, the regulations are clear on this point, and the IRS has a history of swatting down creative interpretations of the rules. It’s not worth paying taxes and penalties on funds that should be safely tax-deferred until you retire.

Know the Rules

While alternative IRA investments can be a really smart way to invest in what you know and protect against market volatility, due diligence is required to make sure in the quest for safer investing you don’t unintentionally endanger your nest egg. In particular care must be taken when setting up and managing self-directed IRAs to avoid making a mistake that draws the scrutiny of the IRS. 

It’s also important to remember that both standard and self-directed IRA owners must begin taking an annual minimum distribution starting at age seventy and a half. On top of Federal regulations, your state may have other rules that apply as well.

But when properly managed, alternative retirement investments can provide a safe and less tumultuous alternative to equities and help you build the kind of long-term security that’s reassuring in an increasingly volatile market—and world.

Trevor Gerszt is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau. To read more of his work, Go Here Now.