Invest Solo 401k in Commodities

 

Solo 401k for commodities | 401k commodities | Invest Solo 401k in commodities

 Yes Self-Directed Solo 401k can be invested in commodities such as oil, gas, steel, etc. as well as mining companies. However, don't put all your eggs in one basket, especially in commodities or the companies that mine them.

The run-up in commodity prices in the last 10 years can be traced back to China's roaring economy and appetite for raw materials such as industrial metals and bulk commodities--coal and iron ore. While many analysts have talked about a "super cycle", long term rise in prices lasting for decades resulting from China demand, investing your Self-Directed Solo 401k solely in commodities in not a good idea, especially since Solo 401k may be invested in a variety of investment types such as real estate, private companies, trust deeds, tax liens, promissory notes, equities, etc. In short, diversification is the name of the game.

More reasons for not solely investing Solo 401k in commodities 

Even though China's steel production consistently rose by 16% per year from 2000 to 2011 and nearly half the raw materials produced worldwide and over two-fifths of copper and aluminum is consumed by China, a slowdown is apparent. Academics studying supercyles reckon that expansions last from 15 to 20 years. The recent commodities cycle started in 2000. However, analysts think the current cycle has already peaked.

Lastly, not all Solo 401k providers Solo 401k plan documents allow for investing in commodities or private mining companies. Therefore, be sure to ask the Solo 401k provider before you open Solo 401k if their Solo401k plan document allows for commodity investments. 


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