Why Self Directed IRAs are one of the Fastest Growing Retirement Plans
What is a Self-Directed IRA?
With pension plans, traditional employer pensions and government benefits gradually dying out, saying goodbye to a full-time job and enjoying a life of fun, travel and hobbies is difficult unless you are willing to roll over your individual retirement account to a self-directed IRA at the right time.
This is a fairly new retirement strategy that is reinventing the traditional notion of retirement savings. But why has a self-directed IRA suddenly become the go-to retirement savings vehicle for main street investors? It’s simple – because it brings investors the freedom to exercise greater control over their retirement savings. This financial flexibility in a fluctuating economy, is a good thing.
If you still aren’t sold (or have questions), here are four more reasons that explain why a self-directed IRA has become wildly popular among main street investors.
4 Reasons Self-Directed IRAs Are Popular
A Self-Directed IRA Puts You in the Driver’s Seat
If you want to change your investment options in an IRA, the process is tedious and time-consuming. It can also involve complex paperwork. All of this means you may not be able to avoid the market sway that you fear the most. Your options are also limited to certain windows. This restricts you to a specific framework when it comes to moving your funds.
Using a self-directed IRA gives you the freedom to invest beyond stocks and bonds. Most traditional IRAs comprise risky paper assets that leave your retirement savings susceptible to market fluctuations. Self-directed IRAs offer smart investment alternatives like precious metals and real-estate.
A self-directed IRA is attractive for those who wish to create a financial legacy to pass on without tax implications.
Self Directed IRAs Offer Checkbook Control
Checkbook control allows you to take complete charge of your investment decisions while eliminating the need for a third party administrator. Using a self-directed IRA, you can make a decision, write a check immediately and instantly add assets to your portfolio. Why let someone take your decisions to invest your money? You can do it your way with a self-directed IRA.
The best part about setting up a self-directed IRA is its flipping potential. This lets you make the most of investment opportunities that are at the brink of exponential growth.
They Offer You Special Tax Advantages
Both traditional and Roth IRA offer tax benefits. So how is a self-directed IRA different? Your contributions to a traditional IRA are tax deductible and with a Roth IRA, your earnings grow tax-free.
But both of these options must ensure strict adherence to the prohibited transaction rule and the disqualified persons rule. Your contributions must also flow from earned income.
With a self-directed IRA, you get to enjoy all of these tax benefits, and more! You also can enjoy the freedom to invest in a variety of assets.
Self-Directed IRAs Provide Freedom to Diversify
A diversified portfolio is the best retirement savings strategy because it not only offers potential for growth but also protects your lifetime savings against the devastating effects of inflation and the downturns of unpredictable markets. Having a wide variety of tax-deferred investment options like private lending, mortgage notes, raw land, gold, or foreign currency allows you to secure your future without being restricted by a multitude of strict IRS rules and regulations.
A self-directed IRA offers more control, more investment options and more potential for growth. This flexibility has led more and more retirement investors to switch from traditional IRAs to a self directed IRA.
Author Bio:
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning. Over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement. You can also find his writing on Business.com, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at rick@sdretirementplans.com.
