In a Nutshell: In the recession that began in 2008, investors received an important reminder of market volatility and the importance of diversification — especially in retirement portfolios. Regal Assets can help investors diversify their portfolios because it specializes in commodities, particularly precious metals and cryptocurrencies. As alternative assets, bullion and crypto help to hedge against downturns in other investments. Regal Assets is also delving into real estate and investment-grade wines as portfolio assets, further enhancing the potential for diversification and financial stability in retirement.
The recession that began in 2008 didn’t just lead to the plunge in values of both stock and property. According to Kiplinger, the recession was responsible for the loss of $3.4 trillion worth of retirement savings value. And as of 2016, 50% of working-age households were at risk of being unable to maintain their standard of living during retirement — a 6% rise from 2007.
Although the economy has improved over the last decade, the repercussions of the Great Recession continue to remind us of how important it is to strive for security in retirement investments. One of the fundamental ways to achieve that is through diversifying portfolios among various industries and asset classes.
Diversification is the primary means of managing risk by mixing investments in your portfolio.
Regal Assets, a leader in high-value commodity investments for retirement accounts through its Regal IRA, specializes in precious metals like gold and silver as well as another, emerging resource — cryptocurrency.
“I called the company Regal Assets for a reason,” said Tyler Gallagher, the company’s CEO. “We do metals well, and can get them right to your front door, fully insured, or we can store it for you. But we also do cryptos in retirement accounts. We are one of two companies that do it, and we have the best selection of cryptos.”
Gallagher recommends investing between 5% and 10% of retirement savings in scarce commodities like precious metals and cryptocurrencies. This allotment helps to hedge other investments against significant market events like recessions.
Diversification can help ensure that investors will always have something of value to fall back on, and Regal Assets makes it easy for them to acquire those assets.
Diversification: The Foundation of a Safe, Stable Portfolio
Diversification carries three major benefits. First, it minimizes the risk of loss by reducing exposure in any one area, thereby lessening the impact of downturns. Second, it can generate additional funds. For example, if one area of your portfolio isn’t performing well, another asset class can pick up the slack.
Finally, diversification can preserve existing funds. If you’ve invested wisely throughout your career, the closer you get to retirement, the less concerned you’ll be with growing your assets. Instead, your primary concern will be preserving what you’ve already accumulated.
It’s best to diversify investments among industries and asset classes to achieve the highest level of security. Concentrating on high-risk investments can quickly wipe out savings, as occurred during the Great Recession, when the nation’s 401(k)s and IRAs lost about $2.4 trillion in the final two quarters of 2008.
Investments are commonly made in stocks and bonds, which represent equity and debt, respectively. The bond market trades in debt securities, meaning investors essentially lend money, which is paid back over time. That earns the investor a stable, if not bountiful, return. The stock market, on the other hand, trades equity securities. The investor buys a stake — typically a relatively small one — in an enterprise, and the stock represents their partial ownership of the company’s total worth. That makes stock potentially lucrative but also volatile and unpredictable.
Commodities are the third category of most traded items and include precious metals and cryptocurrencies. The value of any given commodity is determined by supply and demand.
Mixing assets — including stocks, bonds, and commodities — in a portfolio represents the safest route for long-term investment. For example, the values of stocks and bonds run adverse to one another; as one increases in value, the other decreases, so investing in both keeps portfolios well-rounded and stable.
“The whole point of what we do is we like to sell assets that run adverse to the stock market,” Gallagher said. “Alternative assets are life insurance for your portfolio.”
Investing in Precious Metals Helps Hedge Against Instability
Precious metals — also referred to as bullion — are bulk metals valued by weight. They traditionally take the form of ingots — in bar or block form — or specially minted coins. Due to their rarity and aesthetic appeal, precious metals have been used as currency throughout history.
Modern currencies, though, neither use precious metals for physical circulation nor are they backed by the value of precious metals; currencies like the dollar hold value simply because the central issuing authority — the government — says they have value.
In modern times, the primary practical application of precious metals is in industry. Gold and platinum, for example, are used in manufacturing electronics, as their properties make them excellent conductors. They and other precious metals are also workable and high-luster, making them ideal for art, jewelry, and other crafts. Outside of production, precious metals are used as investments, since their rarity ensures their continued value.
“It is prudent, especially with metals, to have that 5% to 10% diversification,” Gallagher said. “We never tell people they should put it all in because you should never go all in on anything.”
Through Regal Assets, investors can acquire gold, silver, platinum or palladium — a material similar to platinum and most commonly used in catalytic converters, jewelry, and dentistry. These metals come in the form of bars or coins issued by the U.S., Australian, Chinese, Swiss, South African, and Canadian governments.
“Our clients are putting something in place to protect themselves just in case something happens in the marketplace — like in 2008,” Gallagher said. “We saw it happen. If people had diversified into metals even 5% to 10%, I think a lot of them could have avoided some of the pitfalls that happened in the crash.”
Cryptocurrencies Represent a New Age of Investment Value
Similar to precious metals, cryptocurrencies are in limited supply and can help maintain a diversified portfolio.
“Cryptos are kind of the new digital gold, and really fall into the same area,” Gallagher said. “The idea is to take 5% to 10% of your assets and put them into something that runs adverse to the market. Metals are the top option, but if you want a little more diversification, that’s where crypto fits in.”
Although cryptocurrency is still in its infancy, Gallagher believes that, just as the internet has shaped our modern world, the commodity will do the same for the future of finance. Just as some metals are more stable than others — gold and silver versus platinum and palladium, for example — the same is true of cryptocurrencies.
Bitcoin and Ethereum are well-established and have more extensive user bases, which creates more demand and therefore more value than other, smaller-name cryptos.
Regal Assets offers investors access to a variety of cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Stellar, XRP, and Zcash. Like metals, investing in these digital commodities is a long-term strategy.
Cryptocurrencies won’t generate huge returns overnight. Smart stock investments might be able to achieve that goal, but those fast, sizable returns often carry a high level of risk. Like precious metals, cryptocurrencies represent a way to mitigate such risks in other asset classes and ensure a safe, diversified portfolio.
High-Value Commodities Can Offer Security and Diversity
Regal Assets prides itself on its ease of use for clients. Gallagher said that, from the beginning, he has made it a priority to deliver outstanding customer service, and that dedication has carried through to the present day.
“We have made it so easy for people to take their existing retirement account and move their funds over to alternative assets,” Gallagher said. “We do everything. We contact their custodian, and everything’s done online. We’re the easiest people to contact. You can normally speak with us immediately, and no call goes unanswered for the day.”
In this spirit of convenience and quality, Regal Assets partnered with Swiss watchmaker Franck Muller to create the world’s first crypto-enabled watch. The wearable wallet is a logical fit for Regal. It is made from precious metals and securely stores crypto keys and accepts payments. It is also an emblem of the company’s desire to move in new, novel directions to accommodate investors.
“The more opportunities we have to work with clients, the better,” Gallagher said. “I see the future of our company as teaming up with more partners that fall into our space — and our space is, we believe, physical assets.”
And soon investors can include real estate in their Regal IRAs, leveraging property to hedge against more volatile investments. They will also have the option to acquire investment-grade wine thanks to Regal’s partnership with a well-connected wine expert. These high-value wines will be treated like bars of precious metal and held in a secure, specially designed facility in Irvine, California.
“That’s something that I’m very excited about because it works just like gold and silver,” Gallagher said. “Essentially, when the time comes that they want to cash out, we can either sell it for them or we can get it to their front door — safely and fully secured.
These two new offerings represent additional ways investors can diversify their portfolios through high-value commodities. Along with the metals and cryptocurrencies offered by Regal Assets, they can help guard against financial downturns and ensure stability and a high quality of life throughout retirement.