How to Use a Self-Directed IRA to Meet Your Retirement Goals
Are you starting to think about retirement? You need to come up with a plan of attack if you want to retire in comfort. There are a number of different ways you can save for retirement. Many people use a 401(k), IRA or Roth IRA. You can also start a special savings account, keep your tax refund, put money in a CD or use a taxable investment account. What choice is right for you? To be able to answer that question, you need to gather some more information about the specific types of retirement investment vehicles.
One such specific vehicle is the self-directed IRA. This is a special IRA that opens new investment opportunities to you. To help you understand how to use this type of investment vehicle to meet your retirement goals, you have to look at a few key points. Use the following guide to learn more about this unique investment opportunity available to you.
What is an IRA?
Designed to help individuals save for retirement, an IRA is a special kind of savings account. The traditional and Roth IRAs are two different kinds of accounts. The main difference between these two account types is the tax benefits; whether the income is put in the account tax-free or taken out tax-free. Usually, this type of account has a maximum yearly amount that can be invested. This amount may vary depending on your situation, but your IRA custodian should be able to give you more information. You can invest in an IRA, whether Roth or traditional, while you are investing in an employer-funded retirement account.
Now that you have some understanding of what an IRA is in general, you have to take a look at the specifics of a self-directed account. A self-directed IRA can be either a traditional or Roth account. The main difference this special account sees is the investor has more control over what he or she is able to invest in as far as stocks, mutual funds, precious metals and the like.
No matter what kind of IRA you are thinking of starting, the IRS has certain restrictions and guidelines in place. The restrictions you face will also depend on the company you are working with. For example, Regal Assets is a company that helps you invest in precious metals and other assets commonly unavailable to retirement savings plans. Of course, as you work to invest your money in this type of account, you will have to work with a self-directed IRA custodian to ensure you are following all of the proper guidelines from both the IRS and the institution.
You have more freedom over your own financial future with a self-directed IRA. You can meet your retirement goals because you have the freedom to diversify your investments in areas you are familiar with. This diversification makes your entire savings a little safer. If all of your money is in paper-based stocks, bonds and mutual funds, it can all be affected by the same market fluctuations. Investing in alternative assets means the same market hiccups will not be as detrimental to your entire savings.
Because it is self-directed, you are also able to take more risk than you would with another custodian. Your self-directed IRA custodian will be able to put your money into assets with a potentially higher return. You can use this type of account to meet your goals by taking more risks while reducing part of your risks through diversification.
You are also able to choose from alternative investment options to ensure your retirement fund is diversified. The investments allowed will depend on the company you work with for your retirement savings. The best self-directed IRA companies will likely allow you to invest in assets like:
- Hedge Funds
- Renewable Energy Sources
- Land Trusts
- Unsecured and Secured Notes
- Real Estate
- Precious Metals
- Mutual Funds
- Private Placement Memorandums
Creating a diverse investment is important for the overall health of your account and future retirement fund. Many stocks, mutual funds and other paper-based investments are at the mercy of inflation and the stock market environment. When you spread your investments out through diversification, you are able to make your retirement fund a little safer.
Find Your Guidance
The self-directed IRA is great because you can use your own expertise to make investments for your retirement. However, that does not mean you are not going to need some guidance along the way. There are a lot of nuances when it comes to investing for retirement. You have to follow the laws, guidelines and regulations setup by the IRS or you will have some major problems arise. When it comes to your IRA, you want to work with the best self-directed IRA companies around. This requires some research on your part. The research is worth it because a knowledgeable custodian will be able to offer you a world of guidance and support.
Your custodian will make sure you are investing in only approved assets. He or she will be able to ensure you follow any and all regulations set up by the IRS and the institution you are investing through. Not only will this person be able to ensure you follow the rules, but he or she will be able to give you advice. Sure, you can invest in what you know. If you are a real estate mogul, you can invest in real estate. However, you will still want to diversify your account beyond your expertise. You will still need advice about mutual funds, stocks, bonds, CDs, precious metals and anything else you may want to invest in. A self-directed IRA gives you the ability to meet your retirement goals through guidance from a knowledgeable custodian.
Meeting Your Goals
Everyone has fears about not having enough money to retire. You can make your fears go away by setting up a self-directed IRA account. This type of investment vehicle can help you meet your goals through expert advice, greater diversification and more financial freedom to invest in what you know. Always do research about different investment vehicles to ensure you are making choices that fit your needs. Start working towards your goals today by calling an expert at Regal Assets.