One of the reasons why so many investors are turning to Self-Directed IRAs is because when you choose a Self-Directed IRA, you can open the door to entirely new worlds of retirement investing. Investors know that they can build a diversified portfolio on their terms. But what does that really mean? What are the specific types of investments that retirement investors can use to build a retirement nest egg? To help explain, we decided to take today to talk about more than real estate, precious metals, tax liens, and the other typical “alternative” asset classes we address. Here’s a bigger list of investment options you can use when you choose to Self-Directed IRA.
- Hedge funds. While it may not be a common investment with a Self-Directed IRA, investing in a hedge fund using your self-directed retirement funds is certainly a feasible one as the IRS only prohibits certain retirement investments within a Self-Directed IRA, such as collectibles like art or wine.
- Royalty rights. For many investors, the concern isn’t always building a large nest egg, but a nest egg that generates income. Someone in retirement still has expenses, after all. A passive income source like royalty rights is a fantastic way to enjoy passive income and build wealth for the long-term. Although not a traditional retirement asset, it’s still a valid retirement asset when investing through a Self-Directed IRA.
- Farm real estate. “Real estate” is, of course, a huge category of investing. That’s why many people can get so locked up into one aspect of real estate that they forget the other opportunities available to them. Farming real estate is one such asset class.
- Mutual funds. Many people are of course aware of mutual funds with traditional styles of investing. But did you know that you can still easily invest in mutual funds with a Self-Directed IRA at your disposal?
- Equipment and leases. Talk about assets you don’t normally associate with retirement! Equipment and leases can be part of a retirement investment portfolio, of course, but it’s worth noting that you have to avoid transacting with disqualified persons. For many people used to using equipment and leases, this is a key point to help delineate between retirement and personal assets.
- Commercial paper. We’re not talking about buying from “Dunder Mifflin,” either. Commercial paper, according to Investopedia, is “Commercial paper is a commonly used type of unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities.”
Is this the limit of your options with Self-Directed IRAs? No. In fact, the only limits are the IRS rules, and they can be very favorable toward people who want to build a well-diversified portfolio with a Self-Directed IRA. The IRS only prohibits a handful of specific assets from being held within an IRA, including fine art, collectibles, and wine. Once you know that those are the limits—as well as understand what it means to avoid prohibited transactions—you see how wide open the world of retirement investing can be.
Of course, that’s only the case with a Self-Directed IRA. Interested in learning more about Self-Directed IRAs? Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation. Download our free guides or visit us online at www.AmericanIRA.com.