What is a self-directed IRA?
A self-directed IRA (SDIRA) is a retirement account that allows you to invest in assets other than stocks and bonds. With an SDIRA, you have total control over your investments, which can include real estate, precious metals, private companies, and more.
When you open a self-directed IRA with an approved custodian, they will provide you with a list of approved investments. You then choose the investments you want to make based on your goals and risk tolerance.
The main benefit of an SDIRA is that it gives you greater control over your investment portfolio. This can be especially helpful if you have specific investment goals or want to invest in assets that are not available through traditional retirement accounts.
When you open a self-directed IRA, you’ll need to set up a custodian account. The custodian is responsible for holding and managing your investments. There are many approved custodians to choose from, and they all have different fee structures. You can find a list of approved SDIRA custodians on the IRS website. Once you have chosen a custodian, they will provide you with the paperwork to open an SDIRA account. You’ll then fund the account with either cash or assets from another retirement account. Once the account is funded, you can start investing in approved assets.
Self-directed IRA case study
Let’s take a look at an example. Say you want to invest in a rental property but don’t have the cash to do so. With a self-directed IRA, you can use funds from your retirement account to buy shares of the property. This can be a great way to grow your retirement savings and generate income from rental properties.
Another example is investing in gold and silver. Many people believe that precious metals are a good hedge against inflation, and with a self-directed IRA, you can buy physical gold and silver coins or bars.
You can also use a self-directed IRA to invest in private companies. This can be a great way to get exposure to high-growth businesses that are not available through traditional investment channels.
The bottom line is that with a self-directed IRA, you have the ability to invest in almost any asset imaginable. This gives you greater control over your retirement savings and allows you to pursue your investment goals.
The bottom line
Self-directed IRAs are retirement accounts that allow you to invest in assets other than stocks and bonds. With an SDIRA, you have total control over your investments, which can include real estate, precious metals, private companies, and more.
The main benefit of an SDIRA is that it gives you greater control over your investment portfolio. To achieve this, you will need to set up an account with an approved SDIRA custodian in order to open an SDIRA account. You can fund the account with cash or assets from another retirement account, and once the account is funded, you can start investing in approved assets.
