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Advantages of Self-Directed IRA

A self-directed individual retirement account (IRA) is a type of retirement account that allows investors to have control over their investments, including the choice of assets that they invest in. Unlike traditional IRAs that are limited to stocks, bonds, and mutual funds, a self-directed IRA allows investors to invest in a wide range of assets such as real estate, precious metals, private equity, and more. In this article, we'll explore the advantages of using a self-directed IRA.

  1. Diversification of Investments

A self-directed IRA offers the opportunity for investors to diversify their portfolio by investing in alternative assets such as real estate, gold, and private equity. This diversification can help investors reduce their exposure to market volatility and potentially earn higher returns. For instance, owning real estate within a self-directed IRA allows investors to benefit from rental income and property appreciation, which can be a great addition to a retirement income stream.

  1. Tax Advantages

Like other IRAs, a self-directed IRA offers tax-deferred growth, meaning investors do not pay taxes on their investment gains until they withdraw funds during retirement. Additionally, self-directed IRAs can provide additional tax advantages, such as the ability to invest in assets that are not typically available in traditional IRAs. For example, investing in real estate within a self-directed IRA allows investors to take advantage of tax benefits such as depreciation and 1031 exchanges.

  1. Control Over Investments

With a self-directed IRA, investors have complete control over their investment decisions. They have the freedom to choose assets that they believe will perform well and align with their investment goals. This control can be especially beneficial for experienced investors who have knowledge in specific industries or assets.

  1. Access to Alternative Investments

A self-directed IRA provides access to alternative investments that are not typically available in traditional IRAs. Alternative investments can offer higher potential returns and provide diversification benefits. Additionally, some investors prefer to invest in assets that they can physically hold, such as precious metals or artwork, which is possible with a self-directed IRA.

  1. Estate Planning Benefits

A self-directed IRA can also be a useful tool for estate planning. In the event of the account holder's death, assets within the self-directed IRA can be transferred to beneficiaries, allowing for a smooth transition of wealth. Additionally, a self-directed IRA can provide greater flexibility in terms of naming beneficiaries, allowing investors to allocate their assets to specific family members or charitable organizations.

In conclusion, a self-directed IRA offers numerous advantages for investors seeking greater control over their retirement savings. With the ability to invest in a wider range of assets and greater control over investment decisions, self-directed IRAs can provide higher potential returns, greater diversification, and tax advantages. However, it's important to note that self-directed IRAs require additional due diligence and investment knowledge, so investors should carefully consider their options and seek advice from a financial professional before making any investment decisions. In case you missed it, here is the Self directed IRA training.

Make the wise decision!


Jay Kennedy

Sovereign Sage

Commercial Real Estate Investor

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