Using a Self-Directed IRA might sound like a complicated bit of financial maneuvering, but you’d be surprised. It’s surprisingly accessible for everyday investors—especially those who want to build a retirement portfolio that doesn’t necessarily fit the standard cookie-cutter approach of traditional retirement strategies. But what are the specific benefits of opening an IRA, and how can you use them? Here are a few points you’ll need to know.
The Benefits of Opening a Self-Directed IRA
There are many benefits to using a Self-Directed IRA to save for retirement. Some of the key benefits include:
- You can choose your own investments. With a Self-Directed IRA, you have the flexibility to invest in a wide variety of assets, including real estate, private businesses, and precious metals. This gives you the ability to tailor your portfolio to your specific needs and goals.
- You can save on taxes. When you invest your money in a Self-Directed IRA, you can take advantage of tax breaks that aren’t available with other retirement accounts.
- You can take control of your retirement savings. With an IRA, you are in charge of your own investments. This gives you the ability to make sound decisions about your future and puts you in control of your financial security. Many people also use the Self-Directed IRA as an opportunity to explore the investments they have experience with—but this time, with the tax protections that come with investing in an IRA.
Overall, a Self-Directed IRA can be a great way to save for retirement. It offers a number of tax advantages, allows you to invest in a wide range of assets, and gives you control over your own finances. If you’re looking for a way to save for the future, a Self-Directed IRA may be the right choice for you.
Why Shouldn’t Investors Go the Traditional Route?
Many investors do. In fact, it’s quite common for investors to work with a retirement account that comes through an employer-sponsored program. For many of these investors, the hands-off nature of these investments can be an advantage. But that doesn’t mean it has to be the only option you explore as an investor.
For other investors, the idea that you might invest in real estate or precious metals within a tax-protected account is a tremendous way to add some safety to a retirement portfolio. True diversification happens when investors don’t only own a variety of assets, but assets spread across different asset classes. For example, the stock market might be down one day, but rent that keeps coming in from a real estate investment property may not change. This provides the investor with a tremendous risk profile—but that’s all up to how the investor chooses to build their portfolio.
And that’s what it all comes down to: choice. If you use a Self-Directed IRA, if you open one soon, you can have a lot more choice with your investments than you might have ever dreamed possible. And that’s true even as you enjoy the tax benefits that come from investing in retirement accounts. You’ll be the one handling it, so it makes sense to have a good team with a financial advisor, an accountant, and separately, a Self-Directed IRA custodian who can administrate the account.