Owning a Self-Directed IRA often means that you value freedom and flexibility when it comes to your retirement priorities. But where should you place your Self-Directed IRA priorities? When you use a Self-Directed IRA, what are the benefits that many investors can employ from the start? Here are some of the reason’s investors choose Self-Directed IRAs, and where their priorities lie:
For Self-Directed IRA Owners, A Happy Retirement is a Priority
Consider this: 57% of all workers—not just IRA owners or Self-Directed IRA owners—consider retirement to be a top financial priority. That means that anyone with a Self-Directed IRA isn’t just thinking about the tax benefits. They’re specifically thinking about how the tax benefits might help them retire happy.
But what does it take to retire happy? According to the same statistics, many people expect either the same or an improved living standard when they retire, to the tune of 59%. Those who are already setting retirement goals don’t typically imagine that they’ll be worse off in retirement than they are now. They want a high standard of living, a high degree of happiness, and financial independence.
The issue? People say these are their priorities, but their actions don’t always back that up. Just over one-third of households owned an IRA in 2017, which shows the disparity between what people want—and the action they’re willing to take.
A Self-Directed IRA is a Sign of Taking Action
The investor who holds a Self-Directed IRA focused on action. They know that the amount of lip service they pay toward retirement can’t be withdrawn when they hit the age of 59.
With a Self-Directed IRA, you also have the freedom and flexibility to take action on specific investments that make sense for your individual experience and expertise. For example, you might consider any of the following assets when using a Self-Directed IRA:
- Real estate
- Tax liens
- Private loans
- Private company stock
- Single Member LLC or Checkbook IRA investing
- Precious metals
This expands the capacity of your retirement portfolio. It means that you don’t have to be stuck wondering what your next move will be. For especially hands-on investors, there are options for checkbook control that make the process of Self-Directing an IRA far more intuitive for those who place a priority on taking action.
Building a Retirement Portfolio that Makes Sense for You
The beauty of the Self-Directed IRA is how much you get to shape your own financial future. Rather than relying solely on stock market returns and the bond market for your success, you can build a portfolio that does other things, including:
- Hedging against inflation. Investments like real estate and precious metals can hold on to their value, even if the value of the dollar decreases.
- Building cash flow. Real estate can bring in a substantial amount of money relative to your investment—something that not even stock dividends can do.
- Diversifying risk. Managing risk is critical to anyone who wants to be sure that they’ll retire with dignity. The more you can manage your risk through diversification, the better you’ll feel about having a secure financial future.
For some investors, one priority may be ahead of another. But a Self-Directed IRA is a powerful tool for making your particular strategy bear out in the real world. It’s not a strategy in and of itself. Rather, it’s a tool for carrying out a strategy that emphasizes your particular priorities and builds a retirement portfolio to reflect your values.