A Self-Directed IRA can be a great investment tool, but there are some common mistakes that investors need to avoid. By understanding these mistakes and taking steps to avoid them, investors can help themselves achieve greater success with their Self-Directed IRA investments.
Self-Directed IRA Mistake #1: Not Knowing the IRS Rules and Regulations
Many individuals are unaware of the important rules and regulations set by the IRS. Failure to understand, follow, and abide by these guidelines can result in serious consequences such as penalties, interest charges, or even prison time. It is essential to stay up-to-date with the latest changes in taxes so that you ensure you are handling your tax obligations correctly.
Educating yourself on the details of taxes can help prevent legal penalties. There are many resources available online and offline to help taxpayers stay informed regarding tax laws. Take advantage of these, because these resources can save taxpayers a lot of trouble down the line.
Self-Directed IRA Mistake #2: Not Diversifying Your Portfolio
Diversifying your portfolio is important in order to protect your investments. By investing in a variety of different asset classes, you create a safety net for yourself. If one investment goes down, you have others to cushion the blow; this essentially spreads the risk around. And because Self-Directed IRAs allow for a wide range of retirement assets, you can use them to diversity a portfolio easily.
Self-Directed IRA Mistake #3: Withdrawing Money from Your Account too Early
Withdrawing money from your account too early can be a costly mistake, as it can incur fees that eat away at your savings. For example, premature withdrawals from retirement accounts can mean hefty fines and, depending on the nature of the account, you could also lose out on interest gains or tax advantages that could have benefited you in the long run. It’s important to think strategically before tapping into any retirement accounts and to ensure you take full advantage of their unique benefits. Although having access to your money may feel like a convenience now, always put more importance on planning for the future.
Self-Directed IRA Mistake #4: Not Monitoring Your Account and Being Proactive
By not regularly monitoring your accounts, you risk cybertheft and identity theft. Taking a proactive approach to account security can be an effective way to protect yourself and your finances. A good starting point is by routinely checking the activity in your accounts, setting up alerts for any unusual transactions, updating passwords regularly, and taking steps to ensure that sensitive information is encrypted whenever it is being shared.
Having updated antivirus software installed on all of your digital devices will also provide some added protection against malicious attacks or potential virus infections that could lead to further problems. Being informed and proactive by taking these simple preventative measures will go a long way to help thwart fraudsters from accessing your accounts or any other confidential information.
Self-Directed IRA Mistake #5: Paying Expensive Fees to the Wrong Self-Directed IRA Administration Firm
Hurriedly selecting a Self-Directed IRA Administration firm without taking the time to compare fees and services can have unseen costs down the line. Before choosing an administrator, make sure to read the fee schedules included in contract terms. Many firms charge large setup fees, annual flat fees, and more charges for additional services provided.
Rates between different companies may vary significantly, so doing research and obtaining quotes is essential in ensuring that pricey fees don’t hike up as your account grows. While fees should always be taken into consideration when selecting a firm, it is important to note that cost should never compromise quality of service. To learn more about how Self-Directed IRA handles it, be sure to reach out to us at 866-7500-IRA todacommon