What can you invest in when you direct your own IRA? With a Self-Directed IRA, it may seem that the possibilities are endless. But the truth is, the IRS restricts a certain amount of retirement investments in every retirement account. What a Self-Directed IRA does is open the possibility of you choosing your own asset classes from a list of valid retirement investments. That can include everything from real estate to precious metals to tax liens.
But let us dig deeper into this topic. Here at our site, we explain some of the most popular Self-Directed IRA investment options. And many people choose to make these options a priority for their retirement. The good news? When you use a Self-Directed IRA, it is up for you to choose.
The Self-Directed IRA for Precious Metals (Gold IRA)
The first option on our list is a Self-Directed IRA for precious metals. Gold investing is popular because it is widely perceived as a way to preserve purchasing power no matter what the economic circumstances may be. People who worry about inflation, for example, are confident in knowing that gold may preserve their wealth.
Years like 2020 have been a case-in-point for gold IRAs. Not only has gold seen new all-time highs when measured against the dollar, but it has done it in one of the most uncertain years any of us have experienced. To learn more about how a Gold IRA works, visit our page on the Self-Directed IRA for Precious Metals.
The Real Estate IRA
One of the most popular assets for retirement is that of real estate. Why? Because investment real estate can generate a cash flow for someone, especially when that real estate is owned outright. In fact, real estate can generate better cash flow as a percentage of its initial investment than many assets. For that reason, someone who wants to secure an income for retirement may turn to real estate, especially as a way to leverage their higher income later in life.
There is a lot of freedom that an investor can experience with a Real Estate IRA, including the ability to sell property within the Self-Directed IRA without having to worry about capital gains taxes.
A Self-Directed IRA for Private IRA Lending
Want to secure passive returns for yourself without relying on dividends or real estate? A well-timed loan may be the best way to do it, and it is possible within a Self-Directed IRA. This comes through Private IRA lending, which allows private investors to come in and fill in the gaps where traditional lenders may not be willing to. Self-Directed IRA lending investment options include mortgages, trust deeds, secured notes, unsecured notes, car notes, and more.
A Self-Directed IRA for private Companies
Using a private company within a Self-Directed IRA can be a powerful way to invest. It is possible to purchase private stock in a company, for example. Investors also use Single Member LLCs within an IRA to make it easier to invest within the IRA itself. This arrangement can be known as a “Checkbook IRA” because it means that investors have the flexibility to make investments on behalf of the LLC very quickly and easily.
Choosing the IRA Investment Options for You
The point of an IRA is that you are the one in charge. You are not selecting from a small list of options to make sure that you have the retirement you want. And with that freedom comes the responsibility of doing research and selecting the strategy that suits your personality.