What You Should Know About Self-Directed IRAs

You don’t need someone to tell you the critical role that financial planning plays in your future. Evaluating various retirement options and making investments now, no matter your age, will allow you the opportunity to build your wealth over the years to come.

It is key to speak with your friends, partners, and advisors to familiarize yourself with all of the options available to you, including those that are less common but may be a good fit for your personal situation.

There are a number of retirement options that you’re probably familiar with, including both employer-sponsored retirement plans and individual retirement plans – traditional, Roth, and SEP IRAs and 401(k)s, for example. For those looking to increase the diversity of their portfolio and take control of their investment decisions, there is the lesser-known option within the individual retirement account (IRA) referred to as a self-directed IRA. Companies like CamaPlan and BeneTrends are great examples of self-directed IRA administrators within the industry.

While IRAs typically consist of stocks, bonds, mutual funds, and CDs, self-directed IRAs give you the ability to create wealth outside of traditional investment methods, by making investments in real estate, mortgage notes, private placements, tax lien certificates, hedge funds, and much more.

Private placements, for example, are very popular with self-directed investors. Unlike loans, a private placement is an equity investment in a business opportunity whose shares are not offered to the public or through an open market. While these investments tend to be riskier, they can facilitate lasting wealth.

Despite its lack of popularity in the past, self-directed IRAs are not a new concept. Investing in alternatives to stocks, bonds, and mutual funds has always been allowed by the IRS; however, many advisory firms focus strictly on traditional investment options, which tend to be the easiest to manage.

If you’re interested in pursuing a more diverse portfolio, self-directed IRAs may be an option for you. They do have their own set of rules and regulations that must be followed, so please consider all of these by speaking to your professional advisor and visiting the IRS website.

We invite you to continue the self-directed IRA conversation over on our Facebook page.

P.S. If you want an interesting reading assignment, Google “Mitt Romney, $100M Roth IRA”.