You’re probably aware of what a retirement account is—it’s a place where you can park your money and invest it so you can enjoy tax-protected benefits until retirement age. But there’s also this prefix you can attach to this IRA—“Self-Directed”—and that doesn’t always make sense at first. Aren’t all retirement accounts “Self-Directed IRAs”?

Not exactly. In fact, many traditional brokerages only offer you limited options for investing, based on a few limited choices. Stocks, bonds, funds—that’s about it. But with a Self-Directed IRA, you work with a Self-Directed IRA administration firm to direct your own choices in retirement assets, which means you’re able to pick from real estate, precious metals, and more. Here are the characteristics that put “Self-Directed” in “Self-Directed IRA” so you get a better handle of what this might mean for your retirement.

Self-Directed IRAs and Going Beyond the Traditional Approach

Let’s be clear: Self-Directed IRAs are a departure from the conventional investment approach. While traditional IRAs limit your investment choices to a select few—think stocks and bonds—Self-Directed IRAs are an arrangement in which you can choose from the full gamut of allowed retirement asset classes. Think real estate, farms, closely-held businesses, cryptocurrencies, venture capital investments, hedge funds, and more. In essence, the only limits on what you can invest in are a few exceptions outlined by Congress. And, perhaps more importantly, the limits placed on you by the brokerage you’re working with.

With a Self-Directed IRA administration firm in your corner, however, you can simply direct the firm to make buy/sell orders on the IRA’s behalf. This arrangement makes it possible for you to trade real estate, precious metals, and even private loans within the portfolio.

A Wealth of Options with Self-Direction

The flexibility of Self-Directed IRAs is a bit like a choose-your-own-adventure book. You get to call the shots. Instead of being confined to the offerings of Wall Street, you’re the one choosing what your portfolio looks like. You’re therefore free to customize your portfolio how you want it—whether that means high-risk assets, low-risk assets, or some mix for diversification.

Sound great? It can be. But with this newfound freedom comes responsibility. While Self-Directed IRAs offer more flexibility, you’ll want to be fully informed before you start making new investment decisions. Certain assets, such as life insurance, jewelry, and collectibles, are off-limits within a Self-Directed IRA. If you don’t know this, you could run the risk of penalties and fines.

Taking the Reins over Your Retirement Accounts

As we’ve explained, one of the greatest advantages of Self-Directed IRAs is the ability to take control of your retirement. Rather than relying on a broker or financial advisor, you can become the architect of your financial future. You can, of course, hire advisors—but you’re not limited to what they tell you. By self-directing your IRA, you can break free from the constraints of the traditional investment model. You can strategize your own way to retirement.

Self-Directed IRAs represent a paradigm shift in retirement investing, offering unparalleled freedom and flexibility. But that’s not all they do. They ensure you can “choose your own adventure” while still enjoying the protections of IRAs. You can still have the tax benefits of a Traditional or Roth IRA, for example, even while you invest in less-traditional asset classes in your portfolio.

The key? By expanding your investment possibilities beyond the usual assets, you can unlock new opportunities in your retirement plan. If you’re interested in learning more about how Self-Directed IRAs can benefit your retirement strategy, contact American IRA at 866-7500-IRA.