What Kinds of Investors Should Hold LLCs and Partnerships in a Self-Directed IRA?
If you’re new to the concept of a Self-Directed IRA, an idea like “holding LLCs within my retirement portfolio” might sound a little strange, even exotic to you.
After all, most retirement advice focuses on stocks and mutual funds—playing the market as a long-game, not focusing on other types of assets. But a well-diversified portfolio of any type—retirement especially—should include all sorts of different assets in order to ensure that you are well-diversified and protected from market fluctuations.
As you’re about to see, however, LLCs and partnerships are investments that could have tremendous upside—if you know what you’re doing. That’s why it’s important to see if you’re the right type of person who might consider one of these investments.
The answer might surprise you.
What Type of Investor Are You?
Aggressive short-term: An aggressive short-term investor is someone that’s always looking to make a quick buck the right way. Angel investors can sometimes be aggressive short-term investors if they make their venture capital the focus of their portfolio. These investors want a return on their money now, not “long-term,” and their only retirement plan is to end life rich.
Aggressive long-term: This is someone with plenty of vision; certainly vision enough to see an end-game in which you end up with plenty of income at the end of your life when you can no longer work for it. Aggressive long-term investors can even include young people with traditionally “conservative” portfolios, such as mostly mutual funds, but with a bent on higher risk because at a younger age, they can tolerate the risk.
Conservative long-term: A conservative long-term investor is someone who doesn’t want to rock the boat; all they care about is that the boat arrive at its destination safely. This means that they don’t mind losing a buck or two avoiding the high risks, because they prefer returns they can count on. They want stability even when the markets fluctuate up and down. This is the person who spends a long time building a raft…but eventually, their raft ends up being structurally sound.
What kind of investor are you? In all likelihood, you see some part of yourself in all three. But if you venture toward the aggressive side of the balance scale, then you may find that you have what it takes for LLC and partnership investments in a Self-Directed IRA after all.
Holding These Investments in a Self-Directed IRA
If you tend to be aggressive with your investments, then you’re generally looking for investments like LLCs and partnerships. LLCs and partnerships can be high-value investments with a lot of upside…but when you hold a large share of the value, you also hold a large share of the risk. For young people and people with plenty of capital at hand, these can be very attractive risks indeed—the kinds of risks they can tolerate.
Luckily, you can hold these investments within a Self-Directed IRA if you want to achieve a balanced retirement portfolio that includes both low and high-risk investments.
But what if you have an aversion to high risk?
Then you’ll be pleased to learn that there are a number of advantages you can get from holding your investments within a Self-Directed IRA. If you’re interested in learning more about these advantages, call us at 866-7500-IRA(472) or continue browsing our website. You’ll begin to see that you don’t have to be a specifically aggressive investor to use a Self-Directed IRA as part of your portfolio; as you learn more, you might even find that Self-Directed IRAs fit perfectly into even the most conservative of financial plans.