When you begin to plan retirement, so many options exist that planning gets confusing. Selecting your investment options takes careful research, especially if you’ve opted to champion your own retirement plan by using a self-directed IRA.

SDIRAs open the door to many alternative assets unavailable to those investing with a traditional IRA trust company. With more freedom, however, comes risk. As you plan, it is important to select investments you can rely on. As you build your diversified portfolio, here are the five most trusted self-directed IRA investment options.


1. Precious Metals


Precious metals like gold, silver, and platinum are a great way to diversify your retirement portfolio. This asset provides inflation protection – since it’s a form of real currency. Economic growth supports gold demand and it won’t fall victim to rising interest rates. Often used as a diversity piece, precious metals are a physical asset. Sometimes having a solid asset can be reassuring, especially when it comes to saving for your future.

Additionally, investors can hold mining stocks or precious metal exchange-traded funds. Depending on whether you want the physical collateral or an industry note, this asset can make a nice addition to your portfolio.


2. Private Lending and Promissory Notes


Another trusted asset for SDIRA owners comes with solid collateral. Private lending involves purchasing mortgage notes or promissory notes and receiving payments from a borrower. You can enter in a contract with a prospective borrower and assist them with a big purchase. For individuals with credit issues or who just want to avoid taking a loan through the bank, private lending is very appealing.

SDIRA owners can passively invest using funds and generate a positive return. Lenders set up the terms of the loan. The note could be secured, backed by collateral, or unsecured, not backed by collateral. Regardless, as the lender, you decide on the terms. With the lower risk secured notes, should the borrower default, the lender will collect on the collateral. Essentially, if your borrower takes out a mortgage and defaults, as the account holder, you have a claim to the property. Additionally, lenders can run background checks and require co-signers.


3.  Real Estate


Real estate is one of the most commonly used self-directed IRA investments. Quite simply, purchasing property gives you a physical asset. While the process to upkeep and rent any property can be complicated, doing it right can gain a lot of income. If you plan on buying and selling right away, you can quickly build up your SDIRA, but if you can’t unload your purchase as soon as you thought, there’s always the option of renting.

Real estate purchased with an SDIRA is essentially owned by the SDIRA. Everything from the maintenance to the upgrades is bought and paid for with your IRA. Account holders are separate from their property. If you have the proper funds, this investment may be worth it. Additionally, as a rental, real estate can bring in steady money. There’s versatility to this asset, which could be essential for your portfolio.



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4. Tax Liens


A low-capital, steady return option for investors comes in tax liens or tax deeds. This is a low-maintenance investment that can provide easy returns for your retirement fund. Tax liens are imposed when property owners fail to pay taxes. These tax liens are filed in the county where the property is located.

Investors can purchase these liens and can either receive payback plus interest for owning the lien, or they can be rewarded the property if the original owner does not pay it off. You can purchase these short-term or long-term tax liens (or tax deeds) and pad out your resume.

5. Businesses Or Private Equity


Private equity or business investment are two lucrative investments to fill out your portfolio. If you are interested in investing in a business, either partially or entirely, you can purchase a franchise or a business using your SDIRA and your retirement fund will benefit from it. Much like real estate, however, you cannot run it. You must stay separate from your IRA investments.

If you don’t want to own a business with your IRA, you also have the option of private equity. Investors can buy private placements or private-held entities. Of course, the IRS does not allow investing in general partnerships or S Corporations. Private equity doesn’t have public disclosure laws associated with it. This allows investors to put funds toward private companies. Just be certain that the total ownership of your investment is not 50% or higher to avoid prohibited transactions.


Perform Your Due Diligence


If you are looking for tax-advantaged IRA growth, it will take more than traditional stocks, bonds, and mutual funds. With a diverse portfolio, you can build your nest egg. As you form your retirement strategy, take care to select the assets that best suit your portfolio. Selecting your perfect portfolio takes due diligence and proper research. Before you start arranging your investment portfolio, consult a trusted Horizon Trust financial advisor today. Take your time and choose assets that will benefit you long-term. Your nest egg and future self will thank you.