Here at American IRA, we won’t object if you call us an IRA specialist. It sounds fun—almost like the person you call when you need an expert. But our role as a Self-Directed IRA administration firm is also simple to understand. We’re the administrative side of your Self-Directed IRA, carrying out transactions on the IRA’s behalf so you can make the wide-ranging investments possible with your IRA, including real estate, precious metals, and private business transactions. And since we see so much of the administrative side of Self-Directed IRA investing, we have a few tips to help you along:

Tip #1: Understand Prohibited Transactions

One of the most important things to grasp when investing through a Self-Directed IRA? The IRS’s rules on prohibited transactions. These regulations exist to prevent conflicts of interest within your retirement account. They’ll also ensure that your IRA assets aren’t used for personal benefit. You can’t use your IRA to buy property for personal use—for instance, you can’t stay in a house your IRA owns. You can’t sell your own property to your IRA, or involve “disqualified persons” (like family members) in your investments.

Violating these rules can lead to severe penalties. It may result in the the loss of your IRA’s tax-advantaged status. That’s why you’ll need to make sure every investment decision complies with IRS guidelines. If you’re unsure, always consult an experienced custodian or tax advisor before proceeding with a transaction.

Tip #2: Choose the Right Custodian

You’ll need a specialized custodian—call it an IRA Specialist—to manage a Self-Directed IRA. After all, traditional custodians don’t offer access to alternative assets. Choosing the right specialist is crucial because they’ll handle transactions, maintain records, and ensure good compliance work on your account.

Not all custodians are created equal. Some may specialize in real estate investments. Others might focus on precious metals or other assets. Find one that understands your specific needs, offers transparent fees, and provides responsive customer service.

Tip #3: Diversify Your Portfolio

One of the biggest advantages of a Self-Directed IRA? The fact that you can invest in a wide range of assets. While it may be tempting to concentrate your investments in one area—say real estate—diversification can be critical key to reducing your overall portfolio risk.

Consider spreading your investments across different asset classes. You might consider real estate, private loans, precious metals, and even the traditional stocks or bonds. This ensures that if one asset underperforms, your overall portfolio won’t take a major hit. And the stability of a diversified portfolio will give you some peace of mind, too.

Tip #4: Be Aware of the Due Diligence Required for Alternative Assets

Investing in alternative assets often requires more due diligence than traditional investments like stocks or mutual funds. Let’s imagine you’re investing in real estate. That’s a big commitment! You’ll need to evaluate the property’s value, condition, and rental potential. Similarly, private loans will require a thorough assessment of the borrower’s financial health—and you’ll want to adjust the loan terms as needed.

IRA specialists recommend performing exhaustive research before making any investment. This will help you avoid scams, overvalued assets, and ventures that don’t align with your long-term goals. Consider working with experts, such as real estate agents or legal professionals, when necessary to ensure you’re making the best decisions possible.

And it doesn’t hurt to work with a Self-Directed IRA administration firm who will be in your corner, either. At American IRA, that’s what we offer to clients: good administration and sound support. Reach out to us at 866-7500-IRA to learn more about our role as an IRA specialist.