Instead of relying on traditional mutual funds, stocks, bonds, etc., a self-directed IRA gives you the freedom to leverage alternative investments.


Self-directed IRAs are becoming increasingly popular among investors. This is primarily because they offer investors greater control over their own investment funds. 

Being able to invest in more asset classes than are permitted by a traditional IRA gives investors more control over their money and their futures. 

If your employer doesn’t offer a retirement plan and you earn under the IRS’s designated income limits, then a self-directed IRA might be right for you. 

Benefits of a Self-Directed IRA

IRAs are touted as a great investment vehicle for people who earn low incomes to build wealth for retirement. The problem is that investing in the stock market isn’t likely to generate the money you need for retirement if you don’t have a lot of money invested. 

One way to circumvent this concern is to invest in a high-growth vehicle like startups or real estate using your retirement account. 

Self-directed IRAs offer the same tax benefits as a traditional or Roth IRA but with the flexibility to invest in alternative assets. 

In turn, SDIRAs provide several benefits to investors, including:

  • Greater diversification
  • Access to high-growth investments
  • Greater protection against inflation and recession
  • More control over your financial decisions

We should note that there are some drawbacks to self-directed investing, including higher risk and higher regulations. The latter is offset by the requirement to fund your account with a qualified custodian, which may be seen as a pro or con because custodians increase the cost of running your account. 

With that said, let’s discuss some of the best alternative investments you can access with a self-directed IRA



Consult with Horizon Trust


Best IRA Alternative Investments

Real Estate

For many investors, real estate offers a long-term alternative strategy that can, in some situations, yield ongoing returns and increase wealth. Investing in real estate allows you to leverage your retirement savings to purchase single-family and multi-family homes, apartment buildings, commercial properties, lots, and raw land.

Whichever route you choose, it’s important to note that there are specific rules that govern real estate investment as it relates to self-directed IRAs. Ultimately, you cannot purchase property with our IRA that would result in indirect benefits to your personal and/or disqualified family members or in a transaction that would be considered “self-dealing.”

For instance, you can’t purchase a home to live in, rent office space for your own business, or even rent or sell to your family. Also, all costs and revenue must flow out of and back into the IRA and can’t be mixed with your personal finances.

There are several real estate IRA pros and cons, which you can read about further to determine if it is the right investment for you.

Business Startups

Another popular investment alternative option, at least for investors with an entrepreneurial spirit, is to use self-directed IRA funds to gain business equity. In this case, you can use your funds to invest in your own business, franchise opportunities, or even startups — as long as you follow a few fundamental rules. 

One of the most significant benefits of this is the ability to invest in a business opportunity while still benefiting from the IRA tax advantages.

Like the other investment opportunities discussed above, business equity also carries specific rules about how you invest and the role you can play in this business. 

If you choose to invest in business equity, you’ll need to maintain a relatively passive position. You can’t have a controlling interest or own more than 50 percent of the business. Further, you can’t use your retirement funds to benefit you now — everything must be tied back to the IRA.

Promissory Notes (Deed trusts, tax liens, etc.)

A promissory note is an agreement between a lender and a borrower in which the borrower agrees to pay back a loan, plus interest, by the end of a specified term. When you invest in a promissory note using IRA funds, you become the lender, and the agreement is legally binding.

Promissory notes can be secured and backed by collateral (e.g., real estate, stocks/shares, equipment, etc.), or they can be unsecured and not supported by any collateral. 

Though both options can yield results, secured promissory notes are considered less of a risk. As such, many investors choose to invest in mortgage notes, trust deeds, and tax liens, which are all backed by collateral.

In sum, promissory notes can be a smart investment that offers a predictable return.


While cryptocurrency is considered a volatile investment option, the fact remains that many investors have amassed a lot of wealth through it. 

Cryptocurrency not only offers high returns, but recent gains have suggested it can be a promising inflation investment. 

Precious Metals

Precious metals are high-value, naturally occurring metallic chemical elements, including gold, silver, platinum, copper, and palladium. 

For many investors, precious metals, particularly gold and silver, are considered low risk. This is particularly true for metals like gold and silver, which are frequently used in currency, jewelry, and industrial materials.

Like all investment alternatives, it’s essential to research each precious metal of your choice before you leverage your IRA to direct your purchase. 

Keep in mind that unlike some investments, like real estate or promissory notes, precious metals will fluctuate, and earnings are often realized over several years. That means precious metals can be a great option if you want to diversify your portfolio and have several years until retirement.

Private Lending

Private lending can be a great investment for passive income and high returns. While you incur the risk of a private loan, you can also realize massive gains if you optimize your lending strategy properly. 

Private Equity

Private equity represents a private stake in a business or corporation that is exclusive from the public. Private equity investments typically offer a larger stake in companies and the ability to generate substantially higher returns on investments over the life of a company. 

Alternative investment opportunities like those above allow you to create a strong portfolio that can yield both short- and long-term returns. The key to any investment, including those made with your self-directed IRA, is researching the opportunity and working closely with a trusted custodian like Horizon Trust. We offer clients the opportunity to pursue numerous investment options, not just those listed above. Contact us today to learn more about alternative investments and how you can build a robust retirement portfolio.