Higher Returns with Self-Directed IRA Investing: Is It Possible?

There’s no telling what will spook stocks. New tariffs. Threat of a trade war. Threat of a real war. The point is, not everyone feels comfortable with 100% exposure to stocks—and for people with retirement investing accounts, holding real estate has a lot of appeal. But can you also get higher returns with Self-Directed IRA investing, such as real estate or even other asset classes? It’s certainly possible. But the fun of a Self-Directed IRA is that you get to pick your own path forward—and if you don’t pick carefully, you may not get the returns you want. Here’s what you’ll need to know about your responsibility as the investor with a Self-Directed IRA account.

The Freedom—and Risk—of Self-Directed IRA Control

When you open a Self-Directed IRA, you’re stepping into the driver’s seat. That means you’re not limited to the usual lineup of mutual funds or ETFs that can sink with the rest of the market. You choose what goes in your IRA. You can choose assets like rental properties, private equity, or even farmland if that’s what excites you. With that freedom, though, comes a real shift in responsibility. You’re the one doing the research.

And unlike traditional IRAs, where a fund manager makes those decisions for you, you’re in charge of vetting each investment. That’s where many investors either shine—or, potentially, stumble. A Self-Directed IRA doesn’t guarantee higher returns just because it’s more flexible. In fact, poor asset choices or a lack of due diligence can lead to losses just as easily.

In other words, the upside is there, but the upside isn’t automatic if you don’t do your homework.

Higher Returns Aren’t Guaranteed—But They’re Not Uncommon

There are plenty of stories about people who’ve built serious wealth using Self-Directed IRAs. Someone who bought a single-family rental at a discount, held it for a decade, and then sold it for three times the purchase price. Or someone who loaned money through a private note at 10% interest: that can earn them much more than a typical bond fund.

These stories aren’t just luck, though. They usually involve investors who understood their markets, stayed on top of trends, and treated the process like a business. That’s where things can get tricky. While alternative assets can offer higher returns, they can also bring more complexity. A misstep with a prohibited transaction, or even forgetting to title an asset correctly in the name of your IRA, can lead to penalties or disqualification of the account’s tax-advantaged status. So yes, higher returns are possible—but they come with a learning curve.

Building a Strategy That Works for You

Not every asset class is right for every investor. Just because you can invest in tax liens, promissory notes, or raw land doesn’t mean you should. The key is matching your experience and interests with the types of investments you’re comfortable managing. If you’re familiar with real estate, that might be the logical first step. If you’re an entrepreneur, private placements could make sense.

It helps to think of your Self-Directed IRA as a sandbox that mirrors your strengths. If you pick areas where you already have some knowledge—or the curiosity to learn—you’ll make smarter choices. And since this is your retirement we’re talking about, it’s worth taking the time to map out a strategy, set some return goals, and track your performance along the way.

If you’re willing to take the reins over your retirement account, you can get higher returns. But the decisions are ultimately up to you. To work with a Self-Directed IRA administration firm that can help with all the paperwork and the questions, reach out to us here at American IRA by dialing 866-7500-IRA today.

Interested in learning more about Self-Directed IRAs? Download our free guide