Energy Investments in a Self-Directed IRA

Image of wind generators and solar panels with a beautiful skyEnergy. We need it. We use it. It’s certainly not going away. In fact, according to a report published in 2013 by the Energy Information Administration (EIA), energy consumption across the globe is on the rise and is demand is expected to increase by 56 percent between 2010 and 2040. Specifically, the article states:

Renewable energy and nuclear power are the world’s fastest-growing energy sources, each increasing 2.5% per year. However, fossil fuels continue to supply nearly 80% of world energy use through 2040. Natural gas is the fastest-growing fossil fuel, as global supplies of tight gas, shale gas, and coalbed methane increase.

The industrial sector continues to account for the largest share of delivered energy consumption and is projected to consume more than half of global delivered energy in 2040. Based on current policies and regulations governing fossil fuel use, global energy-related carbon dioxide emissions are projected to rise to 45 billion metric tons in 2040, a 46% increase from 2010. Economic growth in developing nations, fueled by a continued reliance on fossil fuels, accounts for most of the emissions increases.

The EIA’s more recent publication in late 2014 further explains, “World markets for petroleum and other liquid fuels have entered a period of dynamic change—in both supply and demand.”

What does this mean for your self-directed IRA?

Quite simply—investments in energy are permissible alternative assets in self-directed IRAs. As such, productive options provide tax-free or tax-deferred income in your retirement account. These assets also offer the opportunity to diversify your portfolio in order to potentially achieve maximum success in building wealth to secure your future.

Above and beyond traditional investments in energy options, there is a growing class of investors interested in green energy. Whether the reason is that these individuals are environmentally conscious or simply because they feel that industry is growing (because it’s not a bad idea to protect the environment and many energy companies are on board)—the point is, when you self-direct you make your own decisions. You have the power to pick and choose, you maintain control over your own funds, and you acquire the freedom to invest at your own pace.

So, if you are interested and understand how to navigate the plethora of energy options mentioned above, now might be the time to consider adding them to your asset base. If you don’t understand but want to learn more about the potential investments in energy may offer—you can learn. Draw on the experience of others and discuss options with a financial advisor who has experience in the field. Arm yourself with as much knowledge as you. Perform due diligence to fully vet your choices before making the jump.

As a self-directed IRA owner you are in the driver’s seat in determining how, when, and where you invest.

While Advanta IRA does not sell investments or give advice, we can introduce you to the many options permissible in self-directed accounts. Energy options are absolutely allowed in these plans. However, not all self-directed plan administrators allow certain assets in the accounts they house. Advanta IRA does allow energy options, including but not limited to, green investments. A few ways your self-directed plan can invest in energy is by lending money to start-ups, using limited partnerships to invest, or acquiring private stock in an energy company.

Questions? Schedule a free consultation.

We can answer your questions and help you get started down the road to potential success regardless of what alternative investments you decide to acquire.

For more information regarding this article or to learn more about self-direction and alternative investments, contact us.

About Jack Callahan

Jack proudly earned his bachelor’s degree in finance and multinational business from Florida State University and his law degree from the University of Florida College of Law. He established Advanta IRA in 2003 and has steadily nurtured and grown the company and the team every year since. Prior to founding Advanta IRA, Jack delivered specialized counsel to real estate investors, small business owners, and real estate professionals on tax, legal and financial matters. As an industry expert, Jack is a frequent speaker on self-directed retirement plans. He is an accredited continuing education instructor for the Florida and Georgia Bar Associations, Florida and Georgia Real Estate Commissions, and The American Institute of Certified Public Accountants.