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Diversification in a Self-Directed IRA

What does diversification really mean in the context of a Self-Directed IRA? American IRA recently posted its answers.

ASHEVILLE, NORTH CAROLINA, US, August 12, 2023/ -- “Diversification” is a word thrown around a lot in investment circles. But what does it really mean, especially in the context of a Self-Directed IRA, or retirement investing? That was the question most recently posed at American IRA, where the Self-Directed IRA administration firm tackled what diversification means, how it applies to retirement investing, and what it has to do with Self-Directed IRAs.

American IRA started off its blog post by noting a definition of diversification, quoting Investopedia’s definition. In that definition, Investopedia noted that diversification is a “technique that reduces risk by allocating investments across various financial instruments, industries, and other categories.” American IRA further translated this definition by saying that diversification is the equivalent of not putting one’s eggs in one basket, but by spreading the risk around by putting eggs in multiple baskets.

American IRA then elaborated what this looks like in stock market investing, noting that rather than putting all of one’s investments into one stock, an investor can diversify to multiple stocks, mutual funds, and more. But even beyond that, American IRA argued, investors can put money across a wide variety of investment asset classes. This has the result of putting one’s eggs in different types of baskets as well.

And that, to American IRA, is where Self-Directed IRAs come in. These IRAs allow investors to put money into a wider variety of asset classes, from real estate to precious metals. And with this wider variety of asset classes, investors have access to greater diversification within a Self-Directed retirement portfolio. That, in turn, can reduce the overall risk of loss, as investors don’t have to rely on the success or failure of the stock market, or any one individual asset class.

Investors are free to choose the degree of diversification within a retirement portfolio. But a Self-Directed IRA makes that choice easier for investors to make.

The Self-Directed IRA administration firm regularly releases information and guides for investors looking to learn more about Self-Directed IRAs. For more information, interested parties may reach out to American IRA at its website,, or call American IRA at 866-7500-IRA.

Rebekah Schram
American IRA, LLC
+1 828.257.4949
email us here