Did you know you’re able to partner your self-directed IRA’s funds with another IRA, person, or entity to invest? This is a strategy used by individuals to help mitigate investment risk and to alleviate the financial burden of costs incurred by certain assets. Partnering funds also provides opportunities for those who invest with limited funds. Read on to discover how you can partner IRA funds to your advantage to grow retirement wealth.
A large part of your success when investing depends on your making good decisions based on solid due diligence. Your knowledge and familiarity with the assets you choose can make a big difference, as well. Even then, it is impossible to be 100 percent certain your investment delivers the returns you seek. When investing your retirement funds, these decisions can be critical to your comfortable retirement. This is why many individuals mitigate investment risk by partnering with others. While your earning potential is commensurate to the percentage each partner invests, partnering divvies up the cost of potential risk and expenses related to the investment by the same buy-in percentage.
Your self-directed IRA can partner funds to mitigate risk just like any other investor can.
3 Partnering Strategies that can Mitigate Investment Risk
- Partner your IRA funds with your personal funds. This creates personal income for you today and retirement income for your future. You are taxed on the personal income earned by the asset, but your IRA’s earnings are tax sheltered. If you use a traditional IRA, tax is deferred, and you won’t pay any until you take distributions in retirement. Roth IRAs offer tax-free distributions in retirement because your contributions are made after tax.
Your IRA can also partner with another person’s personal funds.
- Partner with another IRA. If you have a friend or family member looking to mitigate investment risk, you can partner your IRAs to invest. This presents a unique way for individuals to maximize the wealth-building potential of their retirement portfolios.
You’re even able to partner IRA funds with a disqualified person for the initial investment purchase.
- Partner with more than one person or entity. Your IRA can pool funds to invest with multiple investors. For example, you can partner your IRA with your personal funds, a friend’s personal funds, and also with another friend’s IRA. Real estate investment trusts and multifamily syndications offer ways your IRA can invest
Additional Benefits of Partnering Your IRA Funds to Invest
Not only does partnering help mitigate investment risk and reduce each investor’s costs, there are a few other benefits to consider.
You can invest with limited funds. Partnering funds provides a great strategy to invest with limited funds and build capital in your IRA. Alternative assets such as real estate and private equity can produce income at a faster pace than some traditional assets like bonds and mutual funds. And, you can avoid the erratic behavior of the stock market without worrying if your asset’s value will reduce overnight.
You can invest in more lucrative assets. Anytime you pool investment funds, you capitalize on the opportunity of increasing the buying power that you may not have on your own or in your IRA. Often, those who partner to participate in commercial property investments are able to enjoy large returns they wouldn’t see unless they invested this way.
Learn more about partnering your self-directed IRA funds by scheduling a free consultation with Advanta IRA. Our clients enjoy the ability of making their own investing decisions, and partnering funds offers them even greater flexibility and a wider selection of assets to use to build retirement income.