Quick Guide to Self-Directed IRA Investment Options for 2023

It’s common knowledge that real estate is one of the most popular alternatives to investing in the stock market. However, there are a large range of investments available besides Wall Street’s typical stocks, bonds, and mutual funds. This article provides a deeper look into the alternative asset class with some examples of self-directed IRA investment options that you may not know exist.

First, let’s talk about why people seek alternatives to investing in the stock market to build income in their retirement plans.

Diversification is critical to minimize risk and protect your retirement savings. YouPicture of the sun shining brightly through skyscrapers in the distance, a stock market graph, and stacks of coins that represent alternative investments. shouldn’t plow your money into just one or two assets in any investment portfolio. Instead, a healthy mix is suggested by financial advisors. You want to include options that can hedge losses on the stock market and offset low gains on mutual funds.

A growing number of investors are taking advantage of the opportunities alternative assets present for retirement and investment portfolios. In fact, Prequin, a private data collecting giant that specializes in global alternative assets management statistics, projects that by 2026 alternative assets under management will increase to $23tn (up from $13.32tn at the end of 2021).

And you can invest in these assets to build retirement wealth if you use a self-directed IRA or solo 401(k).

Why Use a Self-Directed Retirement Plan?

The best feature of self-directed IRAs and solo 401(k)s is that you, the account owner, choose the investments instead of relying on a third party for these decisions. When you use your own knowledge and expertise, you can get creative with assets you pick for your IRA. You also have the control to buy and sell assets as you see fit to reap potential growth opportunities in your plan.

Self-Directed IRA Investment Options besides Real Estate

As we mentioned, real estate is a common asset in self-directed plans. You can invest in things like commercial and multifamily property, rehabs, and tax deeds to earn tax-sheltered retirement income. One interesting investment is in the private lending sector. With today’s historically high interest rates, savvy investors see the value in participating in private mortgages and other loans. Borrowers enjoy less-stringent lending requirements and private lenders earn income on the interest rates they charge.

But there are a great number of other options available besides real estate. In fact, the alternative asset class is so vast, there is not one list that encompasses all the possibilities.

Per Internal Revenue Code Section 4975, the only alternative investments not permissible in an IRA are collectibles and life insurance. Other than that, well…let your imagination run wild.

Below is a short list of assets allowed in self-directed retirement plans. While Advanta IRA does not sell investments or give advice, we can tell you what’s available. You can decide which of these stock market alternatives is best suit you.

30+ Alternative Assets to Consider in 2023

    •     Single family homes
    •     Multifamily condos and apartments
    •     Commercial property
    •     Improved and unimproved land
    •     Real estate investment trusts (REITs)
    •     Rehab-and-flips; rental property
    •     Real estate syndications
    •     LLCs, LLPs, and trusts
    •     Farmland and timberland
    •     Livestock and crops
    •     Foreign land
    •     Tax liens and deeds
    •     Private lending options (mortgages and other loans)
    •     Oil and gas rights; mineral rights
    •     Accounts receivable
    •     Warrants and structured settlements
    •     Private equity and private stock
    •     Commercial paper
    •     Convertible notes
    •     Businesses; franchises; startups
    •     Futures trading
    •     Foreign exchange (forex)
    •     Hedge funds
    •     Bitcoin
    •     Energy options (solar, wind, coal mining, etc.)
    •     Sustainable (or socially responsible) investments
    •     Crowdfunding
    •     Precious metals (gold, silver, platinum, palladium)
    •     Equipment leasing
    •     Mobile home parks
    •     …and many other investment options

The “…and much more” part is no joke.

You can own an alpaca farm or racehorses as a business in your IRA. Your self-directed plan can invest in a cool little bar in some tropical locale or even in your own town. Airbnbs are popular now—they, too, can be held in IRAs. Office space, strip malls, and raw land may be fruitful assets. If you have friends who could use a loan, your IRA can be the bank. Are you familiar with real estate? Maybe rehabs or rental property are for you. All income earned from any asset in your plan is deposited directly into the plan on a tax-sheltered basis—even capital gains from the sale of real estate.

The point is you have the power to invest in what you personally know and understand. With so many alternative assets to the stock market, surely there is something you can find to help build the retirement income you desire. And if you hear about an asset you don’t know much about, you can always learn!

Want to Learn More about Self-Directed IRA Investment Options?

Advanta IRA offers free events on alternatives to investing in the stock market and self-directed plans. Our staff lead these interactive events, hosting guest speakers who can help round out your knowledge and investing strategy.

We also host a virtual investor marketplace and networking event where people can pitch their investment deals as well as hear about new deals from other investors. Pitch, Promote, & Prosper is one of our most popular events, and we encourage you to attend one to discover additional alternative investments to the stock market.

If you’d like to speak with someone about how self-direction can help increase the wealth-building potential of your retirement portfolio, contact us today.

This article was first published on June 24, 2021 and has been updated to include current information.

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About Scott Maurer

Scott Maurer, Vice President of Sales for Advanta IRA, is a recognized expert in the field of self-directed IRAs. With a law degree from the University of Florida and as a designated Certified IRA Services Professional (CISP), Scott’s keen understanding of rules and regulations fuels his passion to educate others on the power of investing in alternative assets using self-directed IRAs. Scott is a frequent guest on retirement and investing webinars and podcasts, and he has shown thousands of individuals how to achieve financial freedom by teaching them how to use their retirement funds to invest in private placements, real estate, private lending, and more. Throughout his two decades in the industry, he has watched numerous unique investments unfold, giving him great perspective of what is possible when people take control of their retirement funds and investing decisions.