Planning for retirement can be quite a challenge. When it comes to traditional retirement planning, investment choices can be rather limited. If you are looking for more opportunities and flexibility, the best option for your financial future may be a self-directed retirement account. Individual retirement accounts put you in charge of building your nest egg. If you are interested in stepping away from the traditional style investing, here’s what self-directed investment has to offer.

1. Unlimited Options

Self-directed retirement planning has many potential options. If your company doesn’t offer a retirement plan or you just want to strike out on your own, you can take advantage of self-directed traditional and Roth IRAs.

Additionally, you can open a self-directed 401(K) or Roth 401(K). If you are a small business owner or are self-employed, SEP & SIMPLE plans may be the best choice for you. With the help of a certified IRA custodian, you can start building an account tailored to your situation right away.

2. Tax-Advantaged Savings

With a self-directed retirement account, you can reap the benefits of tax-advantaged savings. Regardless of whether you choose a traditional IRA or a Roth IRA, your retirement fund will experience long-term growth with contributions. How your account grows depends on the type of account you select. Each account has its advantages.

Traditional IRAs are tax-deductible and grow tax-deferred until you withdraw at retirement.  Account holders only pay a tax on what they withdraw. By this time, most retirees are in a lower tax bracket. If you have the money to set aside, this is a great option.

On the other hand, Roth IRA contributions are taxed up-front but have tax-free withdrawals. While you don’t have the immediate tax-break from the contributions, you don’t have to pay taxes on your withdrawals. Your investment grows, tax-free, as long as the account is open.

Before deciding, explore your options to find out which account will benefit you the most.

3. Alternative Investments

Another advantage of self-directed saving is the freedom to use alternative investments. Account holders aren’t tied to the traditional stocks, bonds, and mutual funds. Instead, they can branch out to other avenues and really build a solid investment portfolio. Investors can try their hand at real estate investment, put their money in precious metals, or purchase promissory notes with their IRA. With self-directed investing, there are few limits when it comes to alternative assets – but there are certain rules that need to be followed.

Account holders need to seek out a certified IRA custodian, as per IRS regulations, to handle their assets. When selecting a custodian, it’s important to find someone that is experienced with the right alternative assets. Additionally, a custodian should match your personal account needs and your pocketbook.

4. Personalized Portfolio

With so many options in self-directed investing, it makes sense that the best way to ensure long-term growth for your fund is to build a solid portfolio. Account holders can select the best investments based on their personal knowledge and help their nest egg grow.

You decide how much you want to invest, where, and in whatever assets you deem necessary.  Diversify your portfolio with slow-growing and quick-return options. Create a balance based on your strengths, research, and knowledge of the industry. Balance is the key to a successful portfolio.

Performing Due Diligence

Though self-directed investing can be very rewarding, it’s important to perform your due diligence to avoid any setbacks. While there are many different paths for you to take charge of your retirement, managing your finances personally can leave a lot of room for error. By taking the steps to carefully plan and consult a financial advisor, you can side-step any pitfalls.

Avoid any prohibited transactions such as self-dealing or dealing with disqualified individuals. Neither you nor any disqualified individual can benefit from your IRA investments before you reach retirement. Disqualified individuals include anyone who stands to benefit from your account, including spouses, children, grandchildren, grandparents, parents, and others.

In addition to prohibited transactions, account holders should avoid investing in forbidden assets like the following: collectibles, life insurance, and S corporation stock. As you consider your financial future, be aware that any false steps can lead to unwanted penalties or the disqualification of your account. Before investing, be certain to do your research.

Is handling your personal retirement portfolio right for you?

Self-directed investing is an exciting way to take charge of your own retirement savings. Whether you are a small business owner looking for a retirement plan for you and your employees, or you just want to control your savings, self-directed investment can be the solution you need. Be sure to perform your due diligence when researching your options. Discuss your retirement plan with a trusted Horizon Trust custodian before making any final decisions. With self-directed investing, your options are unlimited.