What is a Self Directed IRA and why would you want it!

Many of you may be familiar with your standard Traditional and ROTH IRA accounts that only allow you to hold limited asset classes such as stocks bonds, mutual funds, ETFs, and so on.

The question becomes why can I only hold these types of assets when the IRS prohibits only a few asset classes from being held in these retirement accounts?

The reason in my opinion is that most traditional custodians like vanguard etc do not want to take on the extra risk or burden of allowing alternative investments such as hard money loans, private business loans, certain precious metals, private placements in various types of business ventures, crypto currency, tax liens, rental real estate and many more alternative investments that may be suited well to your investment plans.

These types of accounts are not widely advertised from what I can tell but if you have a decent sized portfolio than I see no reason not to open a self directed IRA as you gain access to all of these alternative investments plus you can still hold all of the traditional investments you are familiar with under one account.

Don’t get me wrong these asset classes are not for everyone and you definitely need to assess your financial plan with your advisor. These accounts do have some drawbacks such as fees but if set up correctly are minimal. Also you may be subject to some additional regulations and filing requirements that you are responsible for completing or having someone take care of it for you.

This article barely scratch’s the surface of the possibilities, pros and cons but I just wanted to write a quick high level intro to what could be a great tool for many investors. I will write a more detailed article at a later date that goes into more depth but if you are interested start doing your own research or discuss it with your advisors.

These vehicles may not be right for everyone but many people that could benefit may not know that this even exists!

More details to follow.

Disclaimer

This article is for informational purposes only and you need to do your own research or consult your own advisor to determine what is right for you. This article is not suggesting any type of investment l, legal, financial, accounting or any other type of advice.

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