Georgetown Trust Blog

How to Benefit From a Self-Directed IRA

Posted by David J Drummond on Aug 25, 2016 1:43:15 PM

Since the creation of the IRA in 1974, countless Americans have taken advantage of this investment vehicle. Although a traditional IRA certainly has some advantages, including a significant tax break while saving for retirement, there are also some drawbacks.

As a result, many individuals are eager to turn to a slightly different approach through a self-directed IRA. Find out some of the ways that establishing a self-directed IRA could benefit you, your financial status and even your loved ones.

Free Up Capital to Explore New Investment Opportunities

An IRA is supposed to be a way to save up for retirement, but it can unfortunately become a collection of assets that you don't truly have control. . By creating a self-directed IRA instead, you can transfer assets into a retirement account, with flexibility to invest as you choose.

You'll have direct access to a your capital, and you'll have a vast number of alternative investment opportunities at your disposal. You might choose to invest in new startup companies, in real estate or in precious metals, and you can change your mind or fluctuate with the markets rather than relying on an account manager to call the shots.

Secure Assets From Seizure or Bankruptcy

Some investors look at the process of creating a self-directed IRA as too much work, and prefer to incur substantial penalties by withdrawing assets from their IRA to invest. However, doing so is more than just a way to incur higher taxes. It can also put your financial assets at greater risk.

An IRA is protected from many legal actions, such as bankruptcies or asset seizures. While no investor would purposefully plan for these circumstances, keeping money in an IRA of some kind can be a way to prevent loss. With an SDIRA, you can have the best of both worlds: Financial protection and countless opportunities for investment.

Take the Reins on Your Financial Future

Ultimately, starting your own self-directed IRA is about regaining control over your future. Planning for retirement is a big deal, and putting it all in the hands of a financial executive you may not have even met or chosen personally can feel like a tremendous risk.

An SDIRA allows you to choose where your investments go and what risk level you're comfortable with, providing peace of mind about the status of your assets and your future retirement. 

Add Diversification to Your Holdings

One of the major downsides to a more traditional IRA is that many of the investments it contains will be domestic. In fact, many IRAs are exclusively domestic in nature, which means that investors are missing out on countless different opportunities on a global scale. 

The reality is that today's economy can fluctuate wildly, and diversification is the only truly effective way to mitigate risk. By having a self-directed IRA, you can feel free to invest in global markets and in multiple currency types.

Even if a single banking system were to fail, or your custodian fails, or a specific currency suffers from inflation, you'll still have a financial safety net to fall back on; because your money is in your company’s bank account.

Whether you're just starting to plan for retirement or it's just around the corner, a self-directed IRA can be a smart investment vehicle with a number of clear benefits.

Take Control of Your Investments with a Self-Directed IRA

 

Topics: Self-directed IRA