Contributor Since 2017
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 12 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at email@example.com or visit www.sdretirementplans.com.
Retirement investing may not seem like the most interesting activity, but with self-directed IRAs, you can get more creative with your investment preferences. Some people want to explore their investment options beyond stocks, bonds, mutual funds and other conventional choices proposed by standard IRAs. For those intrigued in investing their IRA earnings in alternative investments, either it is real estate, private placements or even farm. But there's another lucrative option: self-directed IRAs.
What Is A Self-Directed IRA?
A self-directed IRA empowers you to make your own investment choices. This is the retirement channel option that will interest you if:
If your answer is a resounding yes to all of the above points, then honestly, a self-directed IRA investment fund is right for you. Self-directed IRAs, in a nutshell, put you in charge of your investment decisions. In addition to stocks, mutual funds and bonds, you can invest in real estate, precious metals, energy and other alternative investments.
Why Self-directed IRA?
Working within the IRS rules is the key to success when investing with a Self-Directed IRA or 401(k). Investors must be informed about the specific rules that accompany with investing in a self-directed IRA. For instance, you can't use a self-directed IRA to invest in items like collectibles, antiques or rare coins.
Your investment goals and risk tolerance also come into play. Even if you possess no trepidation about controlling your own investment decisions, a self-directed IRA may still miss the mark. This can happen if it doesn't align with what you expect to accomplish or if it requires that you seize more risk than you'd prefer. Your choice of investments can also impact your perspective on holding a self-directed IRA in your portfolio. If your long-term plan is raising your investment nest in a tax-advantaged way, then the self-directed IRA might make more sense. On the other hand, if you require an extra income flow instantly, it would be safer to invest in real estate, outside of your retirement plans.