Sign up for a traditional brokerage and you’ll find everything’s laid out for you. The ability to buy and sell stocks within an IRA. The ability to browse and research mutual funds. But what if your plans for retirement are a little more broad than that? What if you want to include more diverse assets within a retirement portfolio—say real estate, precious metals, and even private companies? For that, you’d need to turn to a Self-Directed IRA with a Self-Directed IRA administration firm. Let’s explain what it is—and how you can decide whether this fits your future.

What is the Traditional Approach vs. Self-Directed IRAs?

The traditional approach to retirement savings typically involves using a conventional IRA, which is managed by a financial institution. This institution will likely offer a predefined set of investment options. You’re not reinventing the wheel here. In fact, this is how most people invest.

Using a traditional broker, you deposit funds into an account with a financial institution, such as a bank or brokerage. The institution provides a range of investment options, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). The key advantages of this approach include simplicity (it’s easy to set up and manage), tax benefits (it’s an IRA, after all), and the ease of choosing through predefined options.

Using a Self-Directed IRA is different. After all, the traditional approach has its limitations, particularly in terms of investment flexibility. Investors are confined to the products offered by the institution, which may not include alternative investments such as real estate or private equity. If you work with a Self-Directed IRA administration firm, however, you’ll find that having a third-party custodian on the IRA can streamline the process of diversifying your portfolio. A Self-Directed IRA administration firm that supports transactions like real estate and precious metals means you’ll have the options to make those purchases in your account if you so choose. And that’s a lot more freedom than the typical retirement investor is used to.

Why Self-Directed Your IRA?

It depends on your goals. If you’re an astute real estate investor, for example, and you want to include real estate assets in your portfolio, there’s no choice. The Self-Directed IRA is clearly the superior option because that’s how you’ll be able to include real estate assets in your retirement portfolio.

If you’re a “set it and forget it” investor who prefers stocks, however, you may think that the traditional approach is the only option. But even here, you can use a Self-Directed IRA. For example, here at American IRA, we offer the ability to hold stock brokerage accounts in your Self-Directed IRA. So even if you like that kind of approach, you can always leave yourself the option of broadening your investment horizons, so to speak.

Ultimately, Self-Directed IRAs are about investing with more freedom. They’re also about using the full protections of retirement accounts so you can maximize the value of those investments. Imagine having real estate, for example, within a Roth IRA—a post-tax account that offers all sorts of flexibility when investing. This means that when it’s time to collect retirement distributions, you won’t have to pay additional tax on top of what you’ve already paid. That’s a way to secure a more stable retirement future.

Of course, everyone’s strategy is different. To find out how a Self-Directed IRA might fit within your strategy, reach out to us here at American IRA by dialing our number: 866-7500-IRA. We’ll be glad to talk to you about what we do—and how you can take the next steps.