There is a growing class of individuals who have control of their retirement funds and make their own investing decisions. They don’t rely on retirement plan administrators and brokers to invest for them. They don’t lose sleep at night over the stock market’s performance. They invest in alternative assets that aren’t subject to the ups and downs of Wall Street. If you want the ability to do the same, it’s time for you to learn how to start a self-directed IRA.
Self-directed IRAs have the potential to be especially helpful in our post COVID-19 economy. Since the pandemic started, the stock market has been particularly unreliable. It’s been up one day and down the next, which has caused fear and uncertainty for many individuals whose retirement savings depend on the market’s success.
Self-directed retirement plan owners aren’t on that roller coaster. The assets they invest in aren’t dictated by Wall Street, and don’t lose the total sum of their value overnight.
Why Use a Self-Directed IRA?
Self-directed plans use alternative investments to build retirement income. You can invest in real estate, private loans, cryptocurrency, private equity, and much more. These assets create critical diversity in your retirement portfolio to help offset potential losses on the stock market.
Self-directed IRAs allow you to:
- Take control of creating the retirement you desire
- Build tax-advantaged wealth for retirement
- Achieve true diversity in your portfolio
- Enjoy the power of making your own investment choices
- Invest in assets besides stocks, bonds, and mutual funds
When you self-direct your retirement plan, you have the freedom to invest in nearly anything you want to, at a pace that makes you comfortable. Don’t worry about how the stock market may perform on any given day. If you invest in real estate, you can rest easy knowing that property won’t lose its value overnight.
When you understand the assets in your plan, you can make educated decisions on how to manage them. Whether you buy and hold assets or invest in options you can turn for a quick profit—the choices are yours to make.
The Process to Start a Self-Directed IRA
The process is simple. In fact, it’s easy to start a self-directed IRA. You can open an account and start choosing investments in three steps:
- Choose a plan that suits your needs
These are the different retirement plans you can self-direct:
- Traditional IRAs
- Roth IRAs
- SEP IRAs
- SIMPLE IRAs
- Recordkeeping Plans
- Fund your new self-directed account
There are a few ways to fund your self-directed plan.
- Transfer or rollover funds and/or assets from an existing account into your self-directed plan. To avoid taxation and/or penalties, work with the administrators for your existing plan and the self-directed plan to make sure these transactions are performed properly.
- Make an annual contribution to your self-directed plan. As long as you haven’t already maxed out your contribution limits for the year in an existing plan, you can make a cash contribution into your new plan.
- Explore the world of alternatives and start investing
As we mentioned, there is an incredibly large number of alternative investments you can choose for your self-directed plan. The only things the IRS prohibits in retirement plans are life insurance contracts and collectibles. Other than those items—the sky is your limit.
Use your own knowledge and expertise to invest in:
- Single family homes (fixer uppers, rentals)
- Multifamily property (condos, apartments)
- Mobile homes (individual homes, parks)
- Commercial property (office space, malls)
- Improved and unimproved land (farm land, timberland)
- Real estate investment trusts (REITs)
- Real estate syndications
- IRA LLCs
- Tax liens and deeds
- Private lending options (mortgages and other loans)
- Private equity and private stock (business expansion, startups)
- Futures and forex trading
- Hedge funds
- Energy options (solar, wind, coal mining, etc.)
- Sustainable (or socially responsible) investments
- Precious metals (gold, silver, platinum, palladium)
- …and many other investment options
How to Choose a Plan Administrator
Before you start a self-directed IRA, you must choose a plan administrator. Not all self-directed plan administrators are alike. Some only allow certain alternative investments. Others—like Advanta IRA—allow every alternative asset available. For example, some custodians are not set up to oversee cryptocurrency assets. Others may not have much experience in the various aspects of real estate investing. So, when interviewing self-directed IRA custodians, make sure you find out their area of expertise and which assets they allow in their plans.
What Sets Advanta IRA Apart from the Rest
As a leader in self-directed IRA services with nearly $2 billion in client assets under management, Advanta IRA excels in providing professional service with a personal touch. If you start a self-directed IRA with us, you receive the following benefits.
- A streamlined, simple process to open an account.
- For the lifetime of your account, you work with a dedicated account manager.
- Your account manager helps you through every step to start a self-directed IRA and assists with the details of every investment process.
- We keep detailed records, provide accurate reporting, and ensure compliance with IRS regulations.
- We help you understand the rules for prohibited transactions and disqualified persons to help you maintain the tax-advantaged status of your account.
Advanta IRA oversees the administrative details of your account so you can concentrate on identifying promising investments.
If investing in alternative assets interests you, get in touch with us so we can talk more about how to start a self-directed IRA. We offer one-on-one consultations, and we also provide free webinars every week to help you understand how valuable self-direction can be to help you save for retirement.