Investing for retirement can be difficult, especially for those having trouble affording their day-to-day expenses. Millennial investors want to build an investment fund but purchasing the wrong assets can lead to money troubles.

By using a self-directed IRA, investors can take advantage of a wider pool of alternative assets. Rather than being chained to the typical stocks, bonds and mutual funds, SDIRAs allow account holders to look elsewhere to start building their nest egg. Unfortunately, common alternative assets like real estate can be too big of a purchase for someone without steep pockets.

Not to fear; here are five alternative assets besides real estate that you can invest in with your SDIRA.

1. Purchasing a Business

Self-directed account holders have many options open to them. While real estate may be out of reach, purchasing a business may be just the ticket to building retirement funds. Buying a business can produce money fast and fund your SDIRA. It is a lucrative way of pulling in cash, but the set-up can be tricky. It takes time and money – you can start small, but keep in mind that you must stay separate from your self-directed IRA-owned business.  

The main rule of self-directed saving is that you cannot benefit from your IRA investments before retirement. This can be tricky if you are trying to run the business your IRA owns.

This asset should be owned by your IRA and operated by a non-disqualified individual. An additional pitfall to be aware of is that many new businesses fail; if you don’t invest your funds back into your business you may end up losing money. Perform your due diligence and make sure your account purchases are by the book.

2. Startups or Private Companies

If you don’t want the burden of owning a business or dealing with the red tape coming with it, invest in someone else’s startup or company. Crowdfunding gives your IRA part ownership of your investment.

You can start low and increase your investment as you make more money and your investment grows. The biggest risk lies with the overall success of the company. If the company drops, so will your money. If you decide to invest in a startup or private company, do your research beforehand to select the best possible option.

3. Precious Metals

Metals like gold, silver, and platinum are long-term investments that act as a physical asset. Unlike investing in a company or business, you physically own your investment.

Precious metals hold value and can really round-out a portfolio. While this slow-growing investment works best when paired with others, it is a good place to get started. Additionally, you can invest in mining stocks and accounts. It should be noted that this is a long-term investment. If you are looking for a quick return, this may not be the choice for you.

4. Private Debt or Peer-to-Peer Lending

Another option to consider when looking into investing is peer-to-peer lending or private lending. This investment allows you to buy up someone’s mortgage or debt and have them direct payments to your IRA.

You are essentially a banker entering a deal with a borrower. You decide on the terms of the contracted loan, the payment schedule, interest, and any other details.

Often, this investment is backed by physical collateral. These investments are slow-growing assets that are perfect for rounding out a portfolio.

When selecting a borrower, however, be very wary. You cannot lend to a disqualified individual; additionally, you want to select someone who is unlikely to default on loan payments. Before lending, take steps to write up an iron-clad contract with the assistance of an attorney to protect your assets.

5. Cryptocurrency

Cryptocurrency is a new alternative asset option that many are jumping to be a part of. Called the future of currency, there are many companies creating new cryptocurrencies every day.

Companies like Bitcoin have recently become the hot new investment, and if done correctly, your IRA could benefit. However, cryptocurrency can be a risky investment due to the “newness” of the idea.

Without government regulation or a solid way to secure your investment, you could be losing more money than you put in. Also, the market is in danger of bubbling; with the birth and death of cryptocurrencies daily, it can prove to be too risky an asset.

Performing Due Diligence

You don’t have to stick to traditional investing to build a successful retirement fund. Self-directed investing provides more flexibility and capability to fit your personal budget.

Explore your alternative asset options and discover how you can construct a successful retirement plan. As always, perform your due diligence before investing; seek out a financial advisor and see which options are best for you. Investing doesn’t have to break the bank; learn more about how you could save by contacting our expert SDIRA Custodians today.