subject: How You Can Get Unorthodox Access to Capital with a Self Directed IRA [print this page] Are you looking for investment choices other than just bonds and stocks? More people are looking toward the "out of the ordinary" options that a self directed IRA offers. This type of retirement account has been around for the same amount of time as the traditional investment retirement account when the bill was passed in 1974.
It's no huge secret that an IRA offers remarkable benefits such as tax deductions, asset protection, tax-free profits, and estate planning. But did you know that a self directed investment retirement account also allows you the power of investing tax-free investments such as real estate options, tax liens, notes, loans, mortgages, and life settlements?
Really, the question to ask is, what can't you do with your retirement funds when you decide to take your finances into your own hand? Well, you can't investment in collectibles, artwork, alcohol, gems, antiques, and coins (and a few other things). An SD IRA is also largely prohibited from family members or lineal descent holding prior ownership of an investment.
To help you get a better picture of how this process works, think about it this way. The IRS needs a way to hold the investor accountable for their actions. In order to follow these guidelines, you are required to have a passive custodian oversee all of the administrative details of your account.
Things to Look for in a Passive Custodian
Other than the restrictions that are listed by the IRS, your custodian shouldn't put any restrictions on your investments. Many banking and financing institutions will limit you to the types of investments that they consider "sound." In most cases, these recommended investments are largely dictated by the custodian's self-interest.
It's not unusual for some financial institutions to limit you to mutual funds, CDs, and bonds that they offer. There is a large misconception that these types of investments are the only allowable kinds of investments in a retirement plan.
Savvy investors are looking for more options these days. Your passive custodian should be able to answer any questions you have about the different types of investments available, but the really empowering factor in your self directed IRA is that your investment choices are in your hands.
Why Self Directed Options are Gaining in Popularity
You simply have to look back at recent economics to see why investors are looking towards new options with their conventional retirement accounts. When the economy took a nosedive several years back, Congress's budget analyst reported a loss of over $2 trillion in IRAs. Over 97% of these accounts relied solely on conventional IRAs that were largely dictated by the stock market.
With a self directed IRA, you can expand your portfolio to include more options and offer more balance in your retirement account. The Social Security Administration is estimating that by 2017 they expect a negative cash flow. Furthermore, by 2040, they won't be able to pay full benefits to recipients if things keep going as projected. It's no wonder that investors feel the pressure to take control of their own future with a self directed IRA.
How You Can Get Unorthodox Access to Capital with a Self Directed IRA
