Self-directed IRAs allow owners to fully control their own investment decisions and funds.
These accounts allow an incredibly large pool of alternative investments as assets that build retirement income on a tax-free or tax-deferred basis. While account owners can certainly choose to acquire (and they do) traditional investments such as stocks, bonds, and mutual funds, the greatest appeal of self-direction is a very diverse class of alternative assets—such as real estate, precious metals, private lending opportunities, and much more—that may be more reliable than stock market options.
Why should you consider self-direction?
Well, by all accounts, the stock market is entering this year’s 4th quarter on very shaky ground. An article published on October 1st by Fortune.com reports, “It was a volatile close to the third quarter for the stock market, as evidenced by the fact that the Dow fluctuated by at least 100 points in either direction for five days in a row last week. The S&P 500 and the Nasdaq indices are down 2.6% and 3.6% over the past five days, respectively.” The article further states that according to CNBC, “Wednesday marked the first time since 2011 that all three major indices fell to start October.”
The reasons the stock market is (once again) in upheaval are vast. World problems such as the continuous strife between Russia and the Ukraine, coalition strikes in Syria, and protests in Hong Kong in favor of democracy are causing uncertainty across the globe. Add to that the recent diagnosis of the first Ebola case in the United States, reports the Federal Reserve may raise interest rates, tech woes…and the list goes on. Even though a few stocks are doing well in spite of these issues, many are quite obviously not.
This is why a growing number of savvy investors use self-directed IRAs. These plans offer incredible diversity in retirement portfolios and the right investment can offer a solid hedge to offset the dips and turns of the stock market. While many self-directed investors hold stocks in their accounts, just as many others don’t have the stomach for it. They prefer what they consider safer investments: investments they understand; investments they choose instead of relying on someone to decide for them; things they personally feel have the potential to hold and grow more value over a period of time.
What are common alternative investments clients of Advanta IRA choose as assets in their self-directed accounts?
The list a long one, but a few favorites include:
> Real estate (commercial, single and multi-family homes, raw land)
> Private notes and mortgages Gold and silver
> Tax liens and deeds
> Oil and gas options
> Alpaca farms (yes, you can!)
> Crowdfunding ventures
> LLCs, LLP, and trusts
> Foreign exchange and futures trading
What types of plans can be self-directed?
Traditional and Roth IRAs, SEP and SIMPLE plans, individual(k) accounts, and even health and education savings accounts can be self-directed. Depending on your eligibility, you can begin earning tax-free or tax-deferred income using one of these accounts today!
Advanta IRA is a self-directed account administrator with over a decade of experience in our industry. We do not give investment advice and we do not sell investments. Instead, we encourage investors of all levels of sophistication to become well educated in the nearly endless investment opportunities self-direction offers. As mentioned earlier, alternative assets provide a much larger playing field than traditional investments. However, a healthy portfolio contains both traditional and non-traditional assets, which creates critical diversity that is crucial to your success. Learning how to obtain a healthy balance in your portfolio is important.
Knowledge is power, control is key, and diversity is essential.
If you would like to learn more about self-directed plans, attend one of Advanta IRA’s free webinars or seminars. We offer events weekly for individuals to gain as much knowledge as possible, which empowers them in taking control of their own retirement planning.