Building a well-diversified portfolio isn’t just for seasoned investors—it’s a smart approach for beginners and anyone seeking long-term stability across market conditions. A self-directed IRA offers a wider range of investment options, allowing you to incorporate different asset classes, broaden your diversification strategy, and shape an investment portfolio that aligns with your time horizon, risk tolerance, and financial goals.
At Mainstar Trust, a self-directed IRA enables account holders to choose from a variety of asset categories beyond traditional mutual funds, ETFs, and individual stocks, giving you more flexibility as you build a well-diversified portfolio.
Why Investment Portfolio Diversification Matters
Portfolio diversification spreads your exposure across different types of investments. Since every asset class responds differently to market volatility, pairing higher-risk categories with more stable ones may help reduce overall risk. For example:
- International stocks and emerging markets behave differently than U.S. equities.
- Fixed income investments—including bond funds—tend to be less volatile than the stock market, especially during a downturn.
- Real estate, REITs, and other alternative investments offer additional avenues for building a more diversified portfolio beyond traditional markets.
The bottom line: When one category experiences fluctuations, others may remain steady—or even gain—allowing your investment strategy to stay balanced over time.
How a Self-Directed IRA Supports Broader Asset Allocation
A self-directed IRA through Mainstar Trust opens the door to a wider set of investment options, including real estate, small-cap assets, international stocks, bond market products, fixed income, real estate investment trusts, and certain alternative investments. These options give you the opportunity to design an asset allocation based on the mix of portfolio risk, potential higher returns, or stability you want to pursue.
This broader access may also complement existing holdings you maintain through a brokerage account, workplace plan, or other retirement structure. With more freedom in choosing issuers, providers, and categories, you can build a lineup that includes:
- Index funds and exchange-traded funds (ETFs)
- Dividend-focused assets
- Short-term and long-term fixed income options
- Real estate or REITs
- Alternative investments permitted within an IRA
- Certain private offerings that fall within IRS eligibility rules
It’s still important to be mindful of liquidity, IRS rules, taxes, SIPC and FDIC protections, and the characteristics of each specific investment, particularly when exploring less traditional categories.
Understanding Market Volatility and Your Time Horizon
Every diversification approach is shaped by two key factors: your time horizon and your risk tolerance.
- A longer time horizon may allow for more exposure to equities, international stocks, and higher-risk, higher-return categories.
- A shorter time horizon may lean more toward fixed income, bond funds, or lower-return, lower-volatility investments.
- Changes in interest rates, economic cycles, or shifts in the bond market can impact how different categories behave.
Because a self-directed IRA offers access to a broader range of choices, it’s important to consider how each category may respond to rising interest rates, prolonged volatility, or shifts in the stock market over time.
Rebalancing Your Investment Portfolio Over Time
Once you’ve established your ideal asset allocation, periodic rebalancing keeps your mix aligned with your objectives. Over time, certain categories may grow faster than others, creating an unintentional tilt toward higher or lower portfolio risk.
Rebalancing simply means adjusting your holdings so your allocation returns to your original plan. This may involve trimming certain areas and increasing exposure elsewhere to maintain a healthier balance.
Some individuals choose target date or blended fund structures to automatically maintain allocation over time, while others prefer a more hands-on approach. Either method can support long-term consistency.
What You Can Hold in a Self-Directed IRA at Mainstar Trust
According to Mainstar Trust’s self-directed IRA guidelines, account holders can choose from a wide range of allowable assets, such as:
- Publicly traded securities like mutual funds, ETFs, index funds, and individual stocks
- Fixed income and bond market instruments
- Real estate, rental properties, and land
- REITs and real estate investment trusts
- Certain private placements
- Other alternative investments permitted within the IRS rules
Mainstar Trust serves as the custodian—holding assets, processing transactions, and maintaining compliance-related documentation for your account.
Building Toward Your Long-Term Goals
A self-directed IRA gives you more flexibility to shape a structure that supports long-term stability, portfolio resilience, and exposure to the asset classes you value most. With broader investment options, you can create a resilient mix designed to weather market volatility, adjust to fluctuations, and stay aligned with your personal investment goals.
If you’re ready to open a self-directed IRA or learn more about how it works, reach out to Mainstar Trust to set up your account and get started today.