Diversify Your Assets With a Self Directed IRA
Are you fed up with leaving your retirement savings vulnerable to an unpredictable stock market? An SDIRA allows you to diversify into alternative assets, such as real estate, private equity, secured promissory notes and precious metals.
Alternative investments can be difficult to sell quickly and may require annual reporting of fair market value.
Real Estate
Self-directed IRAs give you the freedom to invest retirement funds in alternative assets such as real estate, precious metals and startups – but this power comes with certain responsibilities: when purchasing non-traditional investments using exchanges that work with your custodian, using non-traditional exchanges will require using special exchanges that operate separately – which adds extra costs as well as increasing fraud risks since you must locate reliable dealers.
Real estate is an attractive alternative asset for SDIRAs due to the potential for both appreciation and rental income growth. Energy investments like mineral rights or oil and gas liens, startup companies, hedge funds or private placements also make for viable options. When making alternative investments it is important to independently verify prices or asset valuations provided by your IRA custodian; either through consulting an independent appraiser or conducting your own research in order to validate any claims of investment value provided by them.
Precious Metals
If you are interested in investing in alternative assets like real estate, precious metals or startups through an IRA, self-directed accounts provide greater flexibility and control – but with that power comes great responsibility.
Make sure that no “self-dealing,” which the IRS strictly forbids, occurs. That means you, other members of your family as well as fiduciaries and beneficiaries cannot use or perform work on investment properties owned by an IRA. Also, purchasing such properties in the past would violate these regulations.
Precious metals, like gold, silver and palladium can be purchased directly or through exchange-traded funds. You can also invest in startup equity via crowdfunding platforms or tax liens and deeds of foreclosed properties. Your IRA may also invest in promissory notes and private debt opportunities where returns are highly predictable as note holders agree to repay a specified sum over an agreed timeframe.
Startup Equity
Although investors may be drawn to non-traditional ventures such as gold IRAs or Bitcoin IRAs, it is wise to refrain from investing in assets which may be difficult to liquidate such as physical precious metals not meeting IRS purity standards, real estate, private equity funds and tax liens. Such investments could incur higher fees such as account management or transaction charges than traditional IRAs.
If you are interested in alternative assets such as turnkey real estate, private placements, IRA LLCs and cryptocurrency investments, it is crucial that you select an IRA custodian who enables true self-directed investing options. While some IRA companies claim “self-directed” options they only provide access to traditional investments with greater regulatory oversight compared to true self-directed custodians – selecting the appropriate custodian will allow you to take full advantage of what a self-directed IRA has to offer.
Tax Liens
Self-directed IRAs allow investors to expand their investment options beyond stocks. Tax lien investing offers one such alternative investment vehicle: investors can earn returns by purchasing delinquent property taxes with interest payments until redemption period has expired; then, foreclosing on it and taking ownership.
Popular investment options include real estate, private equity and precious metals like gold. Some custodians even provide opportunities to invest in cryptocurrencies. Promissory notes offer another non-traditional investment vehicle that provides income generation with fixed terms and predictable profits.
Before investing, it’s essential to familiarize yourself with the IRS rules governing retirement accounts. Most of these regulations aim at preventing prohibited transactions between an IRA account and disqualified parties (i.e. the account owner, family members, fiduciaries or beneficiaries). A professional can assist in understanding which regulations pertain to your particular assets.
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