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Do you need a Self Directed IRA?

Have you been watching your retirement account on a continuous spiral down? My wife just received her quarterly statement from her 401k and it showed a loss of more than 11% for the quarter. Her 401k limits her to stock market based mutual funds, she has no other choices she is a prisoner to the stock market period. If you are tired of watching your IRA spiral out of control there a select few IRA providers that will allow you to get out of the stock market and invest in alternative investments. In fact, IRAs can handle a wide variety of assets, including real estate, precious metals and private business interests. But in order to own these special assets in a retirement account, you’ll have to find a firm that offers a self directed IRA. You can go to any financial institution and open an IRA, but only a select few will allow you to invest in assets other than ordinary stocks and mutual funds.
Why you need it
There are many reasons why having a self directed IRA is a good idea. For most Americans their retirement accounts is where the bulk of their cash is. As a result, if you want to take advantage of an opportunity to make a large investment in something different like real estate or private businesses a self directed IRA has that flexibility.
You may have more profit potential in small start ups or in a foreclosure on real estate. Just as venture capitalists look to get in on the ground floor of a business with good concepts and ideas, using your IRA to make an early investment in a promising business can give you a huge advantage if your IRA is in your control.
What if you want to invest in real estate? It’s hard to find stocks that give you the same type of exposure that owning a particular property gives you. You could buy publicly traded REITs but those are huge diversified companies with holdings nationwide which provides stability, but at the cost of profits.
What you should know
You need to know the rules of retirement accounts if you are going to take control of your retirement funds. First no self dealing, that means you are prohibited from benefiting from your retirements investments. If you own an asset like a beach front rental property, you can’t use it for your own personal benefit. If you are considering borrowing to make a purchase in your retirement account you need to know the rules of extending credit and non recourse loans. Your personal funds cannot get comingled with your retirement funds.
What it comes down to is that you have a lot of money in an IRA and want to expand your investments beyond ordinary securities; a self directed IRA can help you do what you want with your money. It’s your money and you should be in control of it.
Timothy Schubert CISP