What You Don’t Know About a Self-Directed Traditional IRA

Untraditional Power of Self-Directed Traditional IRAs

In the world of retirement planning, Traditional IRAs have long been a popular choice among individuals seeking to save for their golden years. In fact, their long-standing status is even in their name: traditional. However, what if there was a way to take the benefits of a traditional IRA to the next level? Enter the Self-Directed Traditional IRA. In this guide, we will explore the decidedly untraditional power of Self-Directed Traditional IRAs and how they can provide a unique approach to retirement investing.

Exploring Self-Directed Traditional IRAs

A Traditional IRA typically works through a brokerage, who offers a limited amount of options for retirement investing. A Self-Directed Traditional IRA, however, typically means you’re working with a Self-Directed IRA administration firm who can execute trades for many more types of investments.

In other words, while traditional IRAs offer the advantage of tax-deferred growth and potential tax deductions on contributions, they typically limit your investment choices to a selection of stocks, bonds, and mutual funds. With a Self-Directed Traditional IRA, you have the freedom to expand your investment options beyond the conventional offerings.

Expanding Your Investment Horizons

Let’s look at just a few of your options for investing when you use a Self-Directed Traditional IRA as part of your retirement portfolio:

  • Real Estate Investing: Self-Directed Traditional IRAs open up opportunities for investing in real estate assets in your retirement account. Whether you’re interested in rental properties, commercial real estate, or even real estate development, your Self-Directed Traditional IRA can fund these ventures and potentially provide you with a new stream of income during retirement.
  • Private Equity Investments: With a Self-Directed Traditional IRA, you can explore the world of private equity. By investing in private companies, startups, or venture capital funds, you can diversify your retirement portfolio and potentially benefit from the growth of exciting entrepreneurial ventures.
  • Precious Metals and Alternative Assets: Self-Directed Traditional IRAs also allow for the inclusion of alternative assets such as precious metals, private notes, tax liens, and more. These unique investment opportunities can add a layer of diversification to your portfolio and potentially provide a hedge against market volatility. Of course, it’s all up to you to decide how you want your portfolio to look.

The Benefits and Considerations when Working with a Self-Directed Traditional IRA

True: Self-Directed Traditional IRAs offer exciting investment possibilities. But it’s also important to understand the benefits and considerations associated with this approach.

When you use a Self-Directed Traditional IRA, you’ll achieve a level of control far beyond the typical approach. You have the freedom to pursue investments that match your expertise, interests, and experience. Do you have a lot of experience with real estate, for example? With a Self-Directed Traditional IRA, you can emphasize that asset class, if that’s what you want to do.

Another thing to note? With increased investment freedom comes increased responsibilities. Self-Directed Traditional IRAs require thorough due diligence and research before jumping into an investment.

Like traditional IRAs, Self-Directed Traditional IRAs offer tax-deferred growth potential. Contributions may be tax-deductible, and taxes on earnings are deferred until withdrawal during retirement. We recommend consulting with a tax professional to understand the specific tax implications based on your individual circumstances. After all, everyone’s situation is different.

Self-Directed Traditional IRAs provide a unique and powerful avenue for retirement investing on  your terms. By expanding your investment options beyond traditional assets, you can take control of your financial future and potentially achieve greater returns—depending on what you do with this investment vehicle.

Want to know more about the untraditional approach with a traditional retirement vehicle? Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guide or visit us online at www.AmericanIRA.com.