Planning for retirement can be overwhelming. So many options exist, and it’s difficult to tell whether your bank trust has your best interests in mind. Fortunately, if you are interested in taking a more hands-on approach, there are other options open to you. Self-directed investing not only allows you to handle your own investments, but it opens many other investment opportunities as well. If you are interested in what self-directed investing could do for your retirement, here are a few things you should know.

What is Self-Directed Investing?

Self-directed investing is a do-it-yourself style of investing that puts you in the driver’s seat. As the account owner, it’s up to you decided where to invest your hard-earned money, how you’d like to invest it, and how much you plan to put in.

Every part is orchestrated by you from buying and selling options to dealing with the fees. Using your self-directed investment account, you can craft a plan by selecting assets, setting short-term and long-term wealth management goals, and determining the risk factors.

What are the Perks of Self-Directed Investing?

Self-directed investing has its fair share of perks. The most obvious benefit is the self-guided nature of your strategy.

As stated previously, you run the show; there’s no need to rely on a third party. Additionally, your account benefits from tax-advantaged savings. Depending on the type of account you open, your investments can grow tax-deferred or tax-free.

Unlike traditional investing, self-directed accounts have the added benefit of alternative investments. Account-holders can step past the typical stocks, bonds, and mutual funds offered by everyday trusts.

Instead, individual investors can diversify their investment portfolios and think outside the box. You can take advantage of the traditional investments in addition to real estate, promissory notes, precious metals, and more. With more diverse options, you can truly build a portfolio designed for long-term success.

What It Takes To Be a Self-Directed Investor.

While self-directed investing is an excellent option for some, it may not be the best path for everyone. To get the most out of your self-directed investment plan, you must be able to rely on yourself; that commitment needs specific qualities. As an account holder, you must be willing to perform your due diligence. Research the market, create a dedicated plan and find what you need to do to accomplish it. Additionally, you need an eye for detail; monitor commissions and fees, watch the different markets and keep on your investments. You are your own advocate.

Above all things, you need to have unlimited patience. Whether you are waiting on long-term growth or short-term returns, you must be willing to wait for the prime opportunities. It takes discipline and dedication to know when to cut stocks, buy or sell, switch markets, and alter your portfolio. Having this kind of constant vigilance can keep you from making any costly mistakes – and just one slip-up can mean big trouble for your retirement account.

Be Wary Of The Pitfalls.

Self-directed investing can be a successful investment strategy to help build your retirement fund; however, if you aren’t careful, you could run into some difficulties. It’s easy to get caught in the red tape if you don’t do your research. If you don’t pay close attention, you could end up losing out on a big payday, or worse. There are few things to look out for when considering self-directed investing.

Self-directed investing can be expensive depending on the path you take. Some alternative investments can cost a pretty penny, not to mention any additional fees you may have to pay on them. Know your limits ahead of time to avoid treading water. Additionally, while you can invest in several different assets, the IRS is very clear on a few investments that are not allowed: life insurance, s-corporations, and collectibles. Be mindful as you select your assets and build a solid portfolio.

Assets aren’t the only areas with restrictions. As you invest, keep in mind there are prohibited transactions that you cannot perform at the risk of forfeiting your account. Actions such as self-dealing or dealing with a disqualified individual can lead to big consequences. To avoid crippling penalties, be sure to perform the proper research and avoid these pitfalls.

Discover The Possibilities.

If you are willing to dedicate your time and effort toward building your own investment strategy, then self-directed investment may be the path for you. Take control of your retirement and invest in what you want, the way you want. Of course, it’s important to perform your due diligence, keep up to date on the latest market trends, and monitor your account. Be sure to seek out wealth management advice from a trusted Horizon Trust financial advisor and have the confidence to tackle your own investments today.