If you are in your 30s or 40s, you are a “young” investor. When it comes to your financial future, it’s critical to start early. By relying on aTexas IRA LCC facilitator to open a self-directed IRA, you gain greater flexibility while maintaining more control over your retirement savings. Most people do not even begin to contemplate major financial goals such as saving for retirement until they are in their 30s or 40s. As your careers change, you often end up with old 401(k) accounts. Instead of keeping old accounts or cashing them in, consider rolling them into a self-directed IRA so they can grow. In most cases, cashing in a 401(k) means you pay penalties at tax time. The decisions you make now with your money will have a huge impact on your future. Financial security is the goal for most people. To achieve financial security, consider key financial tips offered by a Texas IRA LCC facilitator that sets up self-directed IRAs with checkbook control.
Building up an emergency fund
When you can tap an emergency fund, you are less likely to resort to using a retirement account when unexpected tragedies occur. If you take out a 401(k) loan, you will have less money to rollover into a self-directed IRA after a job loss or change. Moreover, you will likely have to pay back the 401(k) loan or face tax consequences. Also, you don’t want to use any money in a self-directed IRA for personal uses because the IRS will view it as a distribution, triggering tax penalties.
Investing in what you understand
Many young investors consider a self-directed IRA a new investing strategy. A self-directed IRA is simply an investment vehicle that allows you to invest in alternative investments such as real estate. The account is held at a custodian with all the titles of real estate or other investments held in the name of the self-directed IRA. You also pay expenses for your rental property out of the IRA account. Of course, you can also invest in many other different businesses such as mortgage notes, precious metals, tax liens, goat farms or more typical franchises.
Investing sooner rather than later
Many people are familiar with charts and illustrations that demonstrate the advantage of investing early. People who invest starting as little as $1,000 a month at age 30 versus age 40 end up with significantly more money even if the younger person in the illustration stops investing after a decade. With typical stocks and bonds, you might achieve 5 percent compounded annually. With some alternative investments, young investors report even greater returns. Of course, the compound interest is the magic of time because your return gets added to your principal. When choosing a self-directed IRA, you keep the control. Many individual investors stick to prudent ideas such as picking different asset class and having different investments. You likely feel restricted with the few mutual fund options offered inside a traditional 401(k). Even a traditional IRA does not allow you to invest your money in alternative investments such as a rental property.
In addition to diversifying your holdings within your self-directed IRA, rely on investments that help you weather a down stock market. Some investments do particularly well when stocks are down. Other investments grow no matter what is happening on Wall Street. With checkbook control, you can jump on any opportunities without delay. When it comes to investing in rental properties or real estate fix-and-flip properties, a self-directed IRA comes in handy.
At New Standard IRA, we support active investors who want to take control of their financial future with alternative investments. For more information on a Texas IRA LLC facilitator, please, contact us.