Self-Directed IRAs and Your Retirement

by Spencer Cullor on June 25, 2011, Cullor Properties, LLC


Self-directed IRAs give you the power to invest your retirement savings into investments that you know and understand and achieve returns in excess of traditional IRA options.

What is a Self-directed IRA?

Self-directed IRAs are practically the same as normal IRAs. The only difference is that you are able to choose where your money is invested from all of the available investment options (stocks, bonds, real estate, businesses, or even apartment complexes) instead of being limited to traditional IRA investments such as stocks, bonds, and mutual funds. This is very attractive, especially for those who have investment experience and who know how to manage their funds in order to obtain maximum profit while still enjoying all the benefits of traditional IRAs (tax deductions, tax-free profits, and estate planning).

Benefits of Self-Directed IRAs

  1. Taxes: Self-directed IRAs allow taxes on assets held inside the IRA account to be deferred or postponed until the money is withdrawn from the account at retirement. With alternative investments, account owners can take a more proactive approach toward improving investment returns because they can choose assets that are not publicly marketed. Additionally, if invested in real estate, taxes on appreciation and rental income are deferred, so an investor can grow his or her portfolio at an even faster rate.
  2. Diversification: Account holders can make both traditional and alternative investments within self-directed IRAs. The self-directed IRA allows people to diversify into many different assets.
  3. Control: With self-directed IRAs, you will be able to take control of your retirement savings and invest your money in investments that you understand. You aren't stuck waiting for the ups and downs of the stock market to determine your return.
  4. Multiple Streams of Income: When investing in real estate, you can benefit from Appreciation of your asset, Cash Flow generated, and Loan Principal Pay-down by your tenants.

What can I invest in with an Self-directed IRA, and what is not allowed?

Self-directed IRAs are specialized accounts that allow their holders to invest in anything except for life insurance, collectables, and investments that would personally benefit them or close family members, as restricted by the IRS. Real estate, private placements, and businesses, among other things, are common investments within self-directed IRAs. Be sure to refer to a knowledgeable self-directed IRA advisor to find out if your desired investment is qualified.

Ready to get started?

Let Cullor Properties guide you through the process of setting up and investing your IRA or old employer 401K and refer you to a knowledgeable advisor. A retirement account custodian can provide the most up-to-date information regarding your retirement account diversification. Regulatory knowledge and customer service throughout the investment process are essential elements for every diligent account owner.