With Self Directed IRAs, what constitutes a “smart investment?” Most people would say that it’s any investment that yields a large ROI. Someone who bought a stock five years ago that has tripled in value might be called a “smart investor.”
But when it comes to Self Directed IRAs, we think that a different definition is needed. Smart investment shouldn’t only be an investment that increases in value—it should be an investment that achieves a goal you have.
What’s the difference? It might seem subtle at first, but as you read this article, you’ll learn just how different the two ideas are. One strategy of “smart investing” means that you look for the Next Big Stock. The strategy means that you grow wealthier over time. Whether or not one of these strategies resonates with you says more about you than it does smart investments. But if you have the simple goal of getting wealthier over time and building a retirement portfolio that will see you retiring in comfort, then you’re going to want to pay attention:
Self Directed IRAs: Making Strategies and Looking for ROI
If there’s any one area where conservative retirement investing and an investor seeking a big ROI can meet, it’s probably in the realm of Self Directed IRAs. After all, Self Directed IRAs are conservative enough that they’re aimed at retirement…but with all of the options available to you in terms of the types of investments you can make in a Self-Directed IRA, you’ll find there’s plenty of opportunity for aggressive investment—if that’s what you want.
For example: consider real estate IRAs. In Self Directed IRAs, you can hold real estate and even borrow money for purchasing real estate. This is usually the kind of investment reserved for the kind of “smart” investor who wants to make a killing in the real estate market…but it’s available to anyone who wants to build a retirement portfolio that includes real estate.
Getting “Smart” With your IRA Investments
Let’s broaden the definition of a smart investment for a moment. A smart investment isn’t necessarily one that triples. After all, a risky investment sometimes pays off…does that mean it’s a “smart” investment? No! It just means you got lucky.
Getting smart with your IRA investments means you’ll want to lean more on your overall strategy and not any one particular investment for your nest egg. And that means sticking to a few rock-solid principles:
- Maintaining a long-term focus. Self Directed IRAs, after all, are still retirement It’s great if you can grow these accounts nice and big, but remember that the focus is always on the long-term.
- Yes, you can try to pick stocks…but few people ever find that they can beat the market. Diversification means opening up a wide enough net that you’re protected from a degree of risk.
- Making use of IRA rules. An IRA is different from a traditional investment account; it includes tax benefits and other advantages that you’ll want to make the most of; if you don’t, it’s hard to see how your strategy includes “smart” investments.
Building a Nest Egg Over Time
If you’re great at real estate, a Self-Directed IRA in real estate is great for you. But what might be smart for you would be silly for someone else with different experiment. That’s why Self Directed IRAs are great: they provide plenty of options for you to choose your individual investment type, including real estate, precious metals, private companies, and more. If you want to learn more about Self Directed IRAs, be sure to contact us at 1-866-7500-IRA(472) and find out all you can.