Protecting Against Inflation When Rolling Over a 401( k )

  • With a new normal of inflationary pressure coming to seem more likely, active investors are wondering how best to avoid the risk. Excessive inflation, as many realize, can easily eat away at even an otherwise well-managed portfolio. During the worst of times, in fact, runaway inflation can make even the worst stock market crash look tame by comparison.

    Fortunately, there are some good, well-understood ways of guarding against the devastation that uncontrolled inflation can inflict. Typically, these means shifting investments away from financial instruments of an abstract sort, and focusing more on stores of real, inherent value. In all the world of investment, there is no more substantial and enduring conveyor of value than gold and other precious metals.

    The history of gold as an inflation hedge, in fact, is a long and illuminating one. Even as recently as the 1970s, the United States experienced an unprecedented, economy-sapping bout of inflation as the country moved away from backing its currency with the metal. While things have since come back under control, many believe that the unanchored currency of today is ultimately just as vulnerable to the devaluation that can occur through excessive inflation.

    While every investor would like to avoid this fate, some feel the need even more keenly than most. For many investors, for example, the most difficult moment in an investing career comes with the switch from one employer either to another one or into retirement. That can easily leave an investor wondering safe investments, particularly when upcoming inflation seems inevitable.

    Given what is known about gold, though, this situation can be easier to resolve than many might initially suppose. How to invest 100k to minimize risk is a question with at least a few good answers, but one of the leading contenders has to be making use of the resilience of precious metals.

    Fortunately, this is easier to do today than at any time before. Although they were difficult to find a decade ago, well-designed IRA products that are backed with precious metals are now entirely common, with a wide selection of them being available to those who look.

    Just as with common IRA rollovers, too, moving the balance of a 401(k) into such a product is a simple, routine matter. In most cases, investors wondering where to invest 100k today will only to provide some basic details, after which the rest of the process will be handled by the company in question. Even if inflation seems inevitable, then, investing 100k without risk is easier to do than many might suppose.