Self Directed IRA and Alternative Investments – When Should You Start?

Theoretically, you can open a Self Directed IRA just as soon as you are eligible – Which is just as soon as you have earned income. While you’re young, you can afford to be more aggressive, pursuing more volatile asset classes in the hope of achieving superior long-term returns. You have plenty of time to ride out the volatility, and in the long run, a bumpy ride at 10 percent is better than a smooth ride at 6 percent.

However, as you grow older and approach your retirement years, that bumpiness gets more and more scary. The flexibility and diversification that a Self Directed IRA can help provide becomes more and more important as your investment timeline gets shorter and shorter.

With that in mind, the time to begin exploring alternative investments within a Self Directed IRA is as soon as you perceive the broad stock and bond markets as either too risky by themselves, or as promising lackluster future returns, or both.

Alternative Asset Classes

While investment companies that sell pre-packaged IRAs and set up other retirement plans like 401(k)s, SEPs and SIMPLE plans have a vested interest in pushing stock and bond mutual funds (and collecting that big expense ratio in the process), Self Directed IRAs allow you to take personal control of the assets in your retirement account. And you can steer them into almost anything you want. Examples include, but are not limited to:

  • Apartment buildings
  • Commercial real estate
  • Rental housing
  • Fix-and-flip real estate
  • Farms and ranches
  • Privately-owned businesses
  • Partnerships
  • LLCs
  • Oil and gas investments
  • Pipelines
  • Gold, silver and other precious metals
  • Tax liens and certificates
  • Private lending
  • Hard money lending

The list goes on. You can choose any investment or combination of investments you are comfortable with that meets your investment criteria. There are only a few prohibited investments:

  • You cannot own life insurance within a Self Directed IRA.
  • You cannot own jewelry or gemstones
  • Precious metals must be in an approved coin or bullion form.
  • You cannot take personal possession of the precious metals. Instead, you must keep them with a custodian.
  • You cannot invest IRA money in alcoholic beverages
  • You cannot invest IRA money in artwork or collectibles.

Even with these restrictions, however, there is still plenty of room in a Self Directed IRA for you to pursue all kinds of strategies:

  • Leveraged strategies
  • Market-neutral strategies
  • Long-short investing
  • Income investing
  • Hedge funds
  • Real estate
  • Private equity
  • Venture capital
  • Dividend growth strategies
  • Defensive strategies
  • Inflation hedges

And much more.

American IRA, LLC has worked with thousands of successful and imaginative investors to help them execute their alternative retirement investment strategies using Self Directed IRAs, 401(k)s, SIMPLEs, and other tax-favored investment accounts. We have clients in nearly every state. At the same time, our unique flat-rate fee structure allows them to sidestep high assets under management fees and expense ratios while still maintaining substantial diversification. In many case, our clients are saving thousands of dollars per year in AUM and other fees and expenses compared to competitors.

And if you’re interested in increasing diversification, reducing risk, and reducing investment expenses, when would be the best time to start?

The answer is, of course, right now.

For a free, no-obligation consultation on your individual situation, please call us today at 828-257-4949. Alternatively, visit our website at for much more information and a free, comprehensive e-book on self-directed investing.