The Three W’s of SDIRA

The Who, What and Why of Self-Directed IRAs

As the stock market continues its shaky performance and traditional investment portfolios return minimal yields, Self-Directed IRAs have started to gain notoriety and attention.

What are self-directed IRAs?

Usually, IRAs are stuffed with local, state, and/or federal authority-registered securities- such as stocks, CDs, mutual funds and bonds. After the financial crisis, many account holders saw a precipitous decline in the value of their traditional IRA assets as stock values plummeted. A Self-Directed IRA (SDIRA), though technically no different from a traditional IRA or 401k, allows account holders to diversify their portfolios with a variety of different investment options. You can use uninvested funds in your Self-Directed IRA to buy a rental property or office building, for instance. Think about all the opportunities for good investments with growing returns you can take advantage of using your knowledge and skill set!

Why should I consider a SDIRA?

Simply put, YOU are in control of your gains and your losses, a liberating prospect, especially after the last few years! You can decide where to put your money, meaning you can make tax-free investment decisions that you fully understand. You will still enjoy tax-free profits, tax deductions, asset protection and estate planning as you would with any Traditional & Roth IRAs or 401ks. According to a recent NY Times Article, double-digit returns are not uncommon for some SDIRA clients who invest in real estate. Talk about a satisfying investment choice!

Who do I consult when considering a SDIRA?

The IRS requires that SDIRAs are handled by a third-party Custodian and has regulations concerning how to invest a SDIRA. Therefore, you must, select a Custodian or an IRA Administrator that is overseen by a Custodian for your account before you begin investing.

A word to the wise… Besides FDIC-insured deposits, Self-Directed IRAs are not guaranteed. However, the investment risk when dealing with assets you understand is often negligible compared to investment decisions made in conventional IRAs, often with pressure or heavy input from expert advisors who have financial incentives to do so.

Enjoy the road to retirement as much as you will retirement itself- invest in options you know and understand with a Self-Directed IRA