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Investment Ideas to Grow Your SDIRA Retirement Funds

Investment Ideas to Grow Your SDIRA Retirement Funds

Investment Ideas to Grow Your SDIRA Retirement Funds

Grow Your SDIRA

When aiming for a comfortable retirement, the investment options of a self-directed IRA are endless. While traditional IRAs and Roth IRAs allow limited pathways to grow your wealth, a SDIRA expands the options available to allow for maximum long-term growth to secure your future.

With the number of options open to account holders, knowing what investments ideas are available can allow you to make the best choice for your personal account. When researching these options, it’s important to keep in touch with your account custodian to make sure these assets are available and that your self-directed IRA is following the proper guidelines.

With the right investments, you can confidently grow your retirement funds. So, what options will allow for maximum growth? 

Rental Properties and Real Estate

grow your SDIRA with real estateA common investment option involves purchasing rental property or buying up real estate for lease. These properties can be residential houses, commercial spaces, or even vacation rentals.

Account holders would purchase the open space with funds within an SDIRA and all proceeds accrued would cycle into the account. With long-term residents, funds from rental properties can cause your self-directed fund to grow quickly.

However, when it comes to rental properties, these spaces need to be maintained. Any updates, repairs, or other changes would have to be funded through your SDIRA. It’s important to maintain the properties to keep tenants.

Also, when choosing a proper tenant, account holders need to do their due diligence in selecting the most ideal candidates for a beneficial long-term outcome. Whether investing in commercial space for budding business or a beach-side home for seasonal rentals, choose your rental property wisely for the best possible growth. 

Private Money Lending

Another way to expand your SDIRA is by becoming a private lender. Account holders essentially take on the role of the bank and offer a loan. You could help an associate expand a business or begin one. The fund could be used to help a friend experiencing hardship or perhaps to assist in buying a home or car. Being a private money lender allows you to set up a secured or unsecured loan and decide on the terms to repay it.

As the lender, you can choose how much you plan to lend, the amount of interest, the length of the loan, and how much per payment. With a secured loan, you can require collateral to ensure payment and protect against a possible default.

Though unsecured loans are riskier, you can choose to lend less money at a higher interest to protect your investment. When participating in money lending, be sure to use secured promissory notes and record the loan, ideally with an attorney present. It’s crucial to perform your due diligence when lending money privately as a default can ruin relationships, so be cautious who you loan to.  

Mortgages and Trust Deeds

If being a landlord doesn’t interest you, another way to invest is through mortgages and trust deeds. Like with private money lending, this investment option allows you to become the bank. This relieves you of the duty of ‘keeping up’ the property.

Your SDIRA money can be lent to investors buying or flipping houses, earning hard money. These funds are secured by the property. Likewise, you can have more long-term growth options with real estate investing in residential or commercial properties.

With mortgages and trust deeds, account holders reserve the ability to foreclose and collect on the property in the case of a default. This process is safer and recorded, which not only secures your investment, but will continue to increase your account in the case of a default by way of leasing or selling the property. 

Precious Metals

What are SDIRA Alternative Investments? Exploring Diverse Retirement Options Precious Metals like GoldAn overlooked investment idea involves buying into precious metals. While the choices are limited, purchasing specific metals can protect against cost inflation and provide a solid investment.

With the option of precious metals, account holders can invest in types of gold, silver, and platinum.

Bars, coins, and other forms of these metals can be beneficial provided you have access to your funds readily. These assets provide a diverse portfolio which provides better long-term growth for your self-directed IRA. The more diverse your portfolio, the more secure it is.

Startups and Venture Projects

Venture capital and startup companies are an exciting way to expand on your SDIRA. Account holders can invest in growing businesses without getting too attached. These investments are in vision and idea, unlike a small business venture. These companies are new, innovative and could pave the way for something grand in the future.

While an exciting investment option, many startup companies fail within the first year. Another issue with this investment is that while you can lend money, you cannot get involved in the business at the risk of breaching the contract of interest. It’s imperative to perform your due diligence when selecting a venture project. Be sure the ideas you invest in are going to pay out in the end.

Investing in Tax Liens and Deeds

Account holders have an option to purchase investments at auction. Most of the properties available are behind on property taxes, and it’s possible to collect on the revenue. Buyers receive a lien or deed for the property and receive the revenue for whatever public service the property provides.

This route of investment allows SDIRA holders to benefit from premium rates from the liens or deeds with the added security of foreclosing on the property. This investment varies state by state, so before investing, it’s important to research your state’s procedures and check with your IRA custodian.

Investing in Your Future

When investing with a self-directed IRA, there are so many options available. It is up to you as the account holder to decide what would work best for you. With the freedom of a SDIRA, you can effectively build your retirement account for a comfortable future, tax deferred or tax free. Setting up long-term growth is key, so invest wisely to enjoy that hard earned money. 

2 Responses

  1. Mark

    If you are going to invest in real estate to create cash flow, you MUST do your due diligence and research property deals very carefully. Check with the HOA group for the property, if it is a condo, and find out if the fees are due to increase soon. Are they in disrepair? If so, will there be upgrades coming up that will greatly increase the fees and eat into your ROI? will you manage it yourself ,f, or hire a management company, at more costs. Then you have turn over of tenants, which brings utility bills. Then taxes, insurance, bla bla. You get the picture.

    Startups and venture projects are my favorite. Still need to do due diligence carefully, but much less work down the road, just sit back and watch the money flow.

  2. Kevin

    Hi Mark,

    Well said……
    I do a lot of these SDIRA funded projects with investors that invest in me…..
    The problem we often see is that people do not allow for little cost overruns on their projects or of course the hidden gotcha’s like septic tank upgrades ,etc….

    Also, one other thing…make sure you are working with the right SDIRA Company. Some of these Companies are hard to deal with and will cause you delays an missed projects….

    Horizon has been great so you are in good shape here….I was thinking of a different one but maybe we should leave those bad names out…

    Thanks again, Kevin Murphy…….kevin@wholequity.com

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