There is no question that IRAs are popular. Investors all over the country use IRAs to invest in retirement, using their tax advantages to grow as much wealth as possible. But the Self-Directed IRA is a different story. These IRAs are the same as any other types of retirement accounts—for example, the Self-Directed Roth IRA has the same rules as a Roth IRA, because it is the same type of account. Yet for some reason, not many people seem to know about their advantages. And that led us to ask an important question: just how popular is the Self-Directed IRA, anyway?
The Trouble with Finding Self-Directed IRA Statistics
There is not an organization out there that formally monitors how many people have assets invested in Self-Directed IRAs; for instance, there is no American Institute of Self-Directed IRA Statistics gathering up all of the relevant data and publishing it every year. For this reason, it can be difficult to track just how many investors turn to the Self-Directed IRA for their retirement needs. But that does not mean it is impossible.
There are some individual statistics that we can point to that will help you better understand just how popular these are:
Some Relevant Self-Directed IRA Statistics
In 2012, the Securities and Exchange Commission estimated about 2% of IRAs were Self-Directed. At the time, this would have equated to about $100 billion in assets. But there are some other statistics we can look at to get a better idea of how many more people have been drawn to Self-Directed IRAs over the years:
- There has been some impressive growth in the amount of assets held. For example, according to MarketWatch, in 2005, the Millennium Trust Co. managed about $733 million in assets, but in 2013, it was up to over $6 billion. That is impressive growth over less than a decade, equating to over 6x in the overall value of the money being managed.
- Alternative asset classes also have some impressive numbers, when it comes to just how many investors are engaging with these. Between 2005 and 2011, alternative asset class investments went from $2.9 trillion to over $6 trillion worldwide, according to some estimates.
These statistics hint at two things: not only are investors putting more money toward alternative asset classes, but they are increasingly trusting of the Self-Directed IRA. It is difficult to put a number on exactly how many investors are turning to the Self-Directed IRA. The world of retirement accounts is a big one, and even a small percentage of these retirement accounts can constitute a wide degree of nontraditional retirement assets. But since there is no official measuring stick for us to look at, we can only find some proxies that show the true picture.
It is About an Investor’s Personal Statistics
Of course, the popularity of the Self-Directed IRA is not the issue, is it? Some things can be popular or unpopular, and that may not have any bearing on how well it can help an investor. For instance, the famous “Tulip-mania” from centuries back shows that what might be popular as an investment at the time is not always a good idea, and vice versa.
Retirement is ultimately about building up an investor’s own personal statistics. How much money do they have stored away? What kinds of returns are they seeing? How can they maximize their investments while building wealth for retirement? These are the core issues that investors should think about, and the Self-Directed IRA is one vehicle that may help them in that journey.