For investors who are comfortable controlling their own retirement accounts — and those savvy investors who are already dealing in real estate or investing in certain instruments outside of their existing IRAs — there is an option that allows for more diversified, tax-advantaged portfolios than in traditional IRAs or 401k plans.
They’re called self-directed IRAs.
What is a self-directed IRA? A self-directed IRA is a nontraditional retirement account that allows individuals to invest in what they already know and what they may already be investing in. They’re alternative investment options that are not typically allowed within typical retirement plans.
A typical IRA is usually based on stocks, bonds or mutual funds.
With self directed IRAs they can include various types of investments such as Real estate, mortgages, Private hedge funds, Precious metals, even Limited partnerships.
A broader selection of allowable investments in a self-directed IRA means informed consumers can develop a more eclectic portfolio that they control. The self-directed IRA allows them to respond to economic downturns or take advantage of opportunistic and tax-advantaged investments in a more nimble way than going through a conventional IRA custodian.
If you have had experience with these kinds of investments outside of your retirement plan, a self-directed IRA could be a smart way to grow your savings more aggressively.
Well, if you’re someone who understands certain markets and investments and you’re already investing in those as parts of your retirement plan, consider applying what you know to this new investment strategy with a self-directed IRA.
People who open a self-directed IRA may be an angel investor in a company, purchase real estate or own rental property as an investment, Invest in certain commodities, make unsecured personal loans to friends or certain relatives and earn tax-free interest on the loan.
However, you must be very involved in your own investment.
Who should open a Self-Directed IRA?
Well, the bottom line is you must want to make the investment decisions for your account or have a trusted advisor who’s knowledgeable about the options available for these accounts who will work with you.
Now, although you control your investment strategy, self-directed IRAs are administered by neutral third-party professionals, such as Next Generation Trust Services, who serve as custodians of the assets in these accounts. The custodians offer knowledge and insights to help you make informed decisions when you purchase, maintain, or sell your investments, and will ensure those transactions are properly expedited.
So if you’d like more information about how you can open your own self-directed IRAs please contact NextGeneration Trust.com