Planning for retirement often feels complicated. With so many account types and providers, it’s easy to wonder if your money truly works in your best interest.

Relying solely on banks or traditional advisors leaves many people questioning whether their money is working hard enough. Self-directed investors, however, report a very different experience—86% say they’ve felt successful over the past five years. That level of confidence is what makes self-directed investing a powerful retirement strategy.

For investors who want more control, a self-directed investment account offers a way to take charge of retirement planning. Instead of relying solely on a bank or brokerage custodian, you decide where your money goes and how it grows.

What is Self-Directed Investing?

A self-directed investment account is a retirement savings vehicle that puts you—not a broker or advisor—in charge. You choose the assets, manage the transactions, and decide on contribution levels.

This type of account allows you to build a strategy around your financial goals. From setting long-term growth targets to managing short-term opportunities, self-directed investment means you design the portfolio and accept the responsibility that comes with it. You gain freedom and accountability for your financial future by staying actively involved.

What are the Benefits of Self-Directed Investing?

A self-directed investment account gives you more flexibility and control than a standard retirement account. Some of the most significant advantages include:

• Expanded investment choices. You can move beyond stocks, bonds, and mutual funds and add alternative assets, like real estate, promissory notes, and precious metals, to your portfolio.
• Stronger diversification potential. Self-directed accounts make balancing traditional and non-traditional investments easier, reducing risks and creating a portfolio better suited for long-term growth and hedging against volatility.
• Tax advantaged. Like standard IRAs, self-directed accounts allow your savings to grow tax-deferred (Traditional) or tax-free (Roth).
• More control. You decide what to invest in, how much to contribute, and when to make changes. That means you can adapt to your unique needs, goals, and market/industry knowledge instead of relying on a “one-size-fits-all” approach.

Who Should Consider a Self-Directed Investment?

Self-directed investment is best for people who want to stay engaged and make informed strategic decisions about their retirement portfolio. A successful self-directed account requires discipline, dedication, and attention to detail.

It also requires a reasonable amount of asset-based knowledge, either on your own or through an expert.

To make the most of a self-directed investment strategy, it’s important to:

• Track performance regularly.
• Know when and how to rebalance and adjust your strategy.
• Be patient enough to ride out short-term volatility while focusing on long-term growth.
• Recognize gaps in your knowledge base and know when to call on a financial advisor or industry expert.

Risks and Restrictions to Keep in Mind

Like any powerful tool, a self-directed investment account comes with potential pitfalls. Alternative assets may have higher costs, and managing them requires more work than simply holding mutual funds.

The IRS also sets strict rules. Certain assets—such as collectibles, life insurance, and S-corporation stock—are prohibited. Prohibited transactions and trades with “disqualified individuals” can trigger penalties and even disqualify an account. To avoid these missteps, investors must understand the rules, perform careful due diligence, and partner with a trusted custodian when needed.

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.

FAQs

What is a self-directed investment account?

A self-directed investment account is a retirement plan that gives you full control over where your money is invested. Unlike traditional accounts, which are limited to stocks, bonds, and mutual funds, self-directed accounts allow you to diversify with assets like real estate, private lending, or precious metals.

What types of assets can I hold in a self-directed investment account?

You can use a self-directed account to invest in real estate, private companies, promissory notes, precious metals, and more. However, the IRS prohibits certain assets like collectibles, life insurance, and S-corporation stock.

Who should consider self-directed investment?

A self-directed investment account is best suited for investors who want more control, are willing to research opportunities, and can actively manage their retirement portfolio. It’s a good fit if you want to go beyond cookie-cutter options and build a more customized retirement strategy.