Self Directed IRA – How to Build for the Long Term

Investing for short-term gains is great, particularly if you’re good at it. You can make a quick buck, pat yourself on the back, and call it a day. But for other people, long-term investment is the only realistic solution for ensuring a quality retirement. And for these people, a Self Directed IRA can often be the most important tool in the arsenal.

But if you’re new to the concept of a Self Directed IRA, you might not know how to get started – let alone build a substantial retirement portfolio for long-term success. You know that if you put in money consistently now, in the future, you’ll likely end up with a heck of a lot. But what about avoiding mistakes that cost you lots of money? Even though you have a long-term plan, your short-term losses can sometimes be avoided through smart investing.

With that in mind, let’s start exploring some ways you can build a Self Directed IRA with long-term, not short-term, success in mind.

Principle #1: Get Started with your Self Directed IRA Today

Just because your plans are for the long-term doesn’t mean you have the time to stand around with your hands in your pockets. The more quickly you start investing, the better off you’ll be because of the power of compound interest. Compound interest is the exponential growth of investments that truly takes off when an investment has been around for a long time. There’s an old proverb that says “the best time to plant a tree was twenty years ago. The second best time is today.” Take the proverb to heart and you’ll realize the importance of getting started with your plan today.

Principle #2: Build a Basic Portfolio Plan

A basic portfolio plan is simple: what do you want your portfolio to look like? What kinds of investments will dominate it? Will you emphasis stocks and mutual funds? Real estate? Private companies? How big of a portion of your investment will be comprised of precious metals? These are all questions you’re going to want to answer.

Of course, getting started doesn’t mean you have to start off perfectly. Be careful of “paralysis by analysis.” Don’t believe you have to research the absolutely perfect portfolio before you start investing. Just know that you should have a general idea as to your long-term strategy.

Principle #3: Pick a Retirement Date

Dwight D. Eisenhower once said that “plans are worthless, but planning is essential.” In other words, if you predict that you’ll retire at precisely the crack of dawn on your 67th birthday, you should know that it won’t necessarily happen…but making the plans for it to happen are incredibly valuable. And likely the only chance you have of hitting that target date is by setting the plans in motion today.

So pick a retirement date. Consider what you might expect your life expectancy to be, consider your income, consider how much money you’ll be able to put away in the meantime. Consider new expenses in the future, like a mortgage, children, and paying their college tuition. Consider it all to get as specific as possible.

Principle #4: Make it a “System,” Not a Goal

Now that you have your goals in place, you should be able to create an investment system—a regular amount of monthly or yearly investing—that has you on track to hit your goal. Great! Now trust that the system you’ve put in place will get you to where you want to go. Don’t fret and worry, or constantly check your portfolio. Instead, review it every so often—say, once a quarter or once a year—and make adjustments then when you can objectively look at your year-end or quarterly performance.

If you want to learn more about Self Directed IRAs, be sure to contact us at 866-7500-IRA(472) or continue browsing


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