Self-Directed IRA: Surprising Things you can Invest In
Investing in your future can be a tricky task, especially if you don’t know where to start. While the traditional methods of stocks, bonds, or mutual funds are a good place to start, they aren’t the only investment options available.
If you want to explore alternative assets, consider opening a self-directed IRA. SDIRA account owners are not bound to common investments, and you’d be surprised where you can invest your hard-earned money.
If you are interested in opening a self-directed IRA, here are some alternative assets you may not know about.
1. Real Estate
Real estate is common alternative investment that can really benefit your SDIRA. You can grow your retirement fund by renting out a beach house or flipping a home. Rental properties can bring in steady wealth. Real estate investment can be a very versatile option.
When the market is good, you can buy up homes, scope out business properties, or pick up rentals in a great vacation spot. If you don’t want the hassle of being a landlord, you can always purchase a house to flip for quick profit and turnaround.
Whatever you decide to do with your real estate property, with this alternative investment you have a tangible asset.
Before investing, perform your due diligence and research your property’s market value. Also, be aware that you, nor any disqualified individuals, can use the property. Additionally, all upkeep, repairs, and purchases for the property must be bought through your IRA. Take the time to research what you can do with your investment before you put your money down.
2. Precious Metals
Another lucrative investment and tangible asset you can purchase with your self-directed IRA is precious metal. Whether you want to put stake in gold, silver, or platinum, precious metal is a solid investment. The issue with this type of investment is that it will not result in a sizable, up-front payout. While this alternative asset is slow-growing, it is covered against inflation, making it a good long-term buy.
3. Bitcoin and Digital Currency
New to the investment market, cryptocurrency is considered the way of the future when it comes to our daily currency. With Bitcoin leading the charge, this new age concept has garnered a lot of attention, especially with the investment crowd. Cryptocurrency is subject to a tax when sold for profit but holding them in a self-directed IRA lets them grow over time, tax advantaged.
The risk with any type of cryptocurrency, even Bitcoin, is that the market is fairly new. The market is in danger of bubbling and currencies rise and fall daily. Though it is the bright and shining star now, there’s no telling where cryptocurrency may be in the future.
4. Private Loans and Mortgages
Private lending and private mortgages allow SDIRA account holders to become bankers. Borrowers can purchase loans from your self-directed account and all interest and payments would funnel back in. As the account holder, you handle all the paperwork: the contract, the terms, the payment plan, and the interest. These loans are secured by the property.
While being a private lender can provide you with long-term account growth, be aware of a few pitfalls. Be careful who you lend to; should a borrower default, you may be left with a piece of property rather than payments and interest.
5. Buying a Business
Buying a business using your self-directed IRA can be a risky purchase. When done correctly, however, the purchase can by worth a big, long-term capital gain. If you want to invest in a franchise or business proposition but don’t have the funds, you can use your SDIRA.
Since you cannot benefit from your IRA immediately and you can’t act in self-interested using your fund, you must remain passive. With an investment this tricky, it’s a good idea to seek out financial advice before you make any decisions.
Exercising Due Diligence
Planning for retirement doesn’t have to be a chore, but it does take a bit of finesse to truly take advantage of tax-advantaged savings. You don’t have to be pinned to the traditional assets. By performing your due diligence and a little research, you can discover a world of new and exciting alternative assets.
Take the time to consider your options. The best way to prep for the future is will a well-balanced and diverse portfolio.
As always, before you invest, consider consulting a trusted financial advisor. Don’t settle on the traditional; explore your alternative asset options and expand your self-directed IRA portfolio today.