When people hear about self-directed IRA accounts, they jump to the conclusion that only aggressive investors buy alternative investments. However, many conservative investors move money from a traditional IRA or 401(k) account into a self-directed IRA so they can protect their assets.
The best self-directed IRA for conservative investors includes ones that allows real estate, precious metals, tax liens, loans and alternative investments. Just because you take a nontraditional approach doesn’t mean you embrace speculative investments. To the contrary, self-directed investors have more options and can choose their investments wisely. One of the great things about the self-directed IRA LLC is that you make the investment decisions. Having control and choices gives many investors the peace of mind they need to build wealth.
Doing your homework
As a conservative investor, take your time to figure out which nontraditional investments you prefer for your self-directed IRA. In most cases, rushing into a decision does not pay off. When it comes to picking alternative investments, don’t invest in anything that makes you feel uneasy or that you don’t understand. For most people, investing in rental properties is not a risky investment. You don’t have to only invest in what you understand, but research the different industries and types of investments.
Choosing to diversify
When you diversify with different types of investments, the result is a more conservative portfolio. It is a myth that people who take a more conservative approach don’t make as much money. In fact, many speculative investors who fail to diversify lose tens of thousands and sometimes millions of dollars. Some of the types of investment options for the best self-directed IRA include real estate including foreclosure properties and residential real estate; loans including mortgages and structured settlements; private party investments such as joint ventures and private corporations; tax liens; offshore investments and alternative investments including futures contracts, domain names and gold. Diversification is another aspect of flexibility.
Protecting your wealth
When you own a self-directed IRA, you also protect your wealth from fluctuations in the stock market and the overall economy. During the Great Recession, many investors saw their 401(k) balance dwindle. Even though you pick what you believe is a conservative strategy for your 401(k) by choosing less aggressive mutual funds, you can’t control the overall economy. Many experts say precious metals and real estate works as a hedge in a volatile stock market environment.
Enjoying the tax benefits
Although you could invest in rental properties, gold or alternative investments with an individual investment account, you would miss out on the tax advantages. The best self-directed IRA accounts secure your tax-advantaged situation. A self-directed IRA is like any other retirement account. Your investments grow tax-free so end up with more money over time. If you choose a Roth version of a self-directed IRA, you can take out the money when you retire without owing any taxes on the gains. Most conservative investors appreciate tax advantages.
Conservative investors who gravitate toward the self-directed IRA concept are often successful business owners and entrepreneurs who don’t fit within a box. Some of the advantages of a self-directed IRA for individual investors include diversity, tax advantages and protection under federal bankruptcy laws. If you want to stretch your wealth over several generations, consider a self-directed IRA that lets you pass assets to your beneficiaries.
At New Standard IRA, we help our clients reach their highest potential with alternative investments for retirement. Talk to us about setting up an IRA/LLC structure for your self-directed IRA in Austin, TX. We provide conservative and aggressive investors with true security and the autonomy that comes with checkbook control. For more information about how to achieve simplicity and flexibility in the complex financial work, please contact us.