Why are self-directed IRAs trending now?
With the increased financial volatility, retirement planners and individual investors are looking for some stability beyond their traditional investments.
A traditional IRA will have to deal with volatile public assets like stocks, ETFs, and mutual funds. They are not as safe of a bet as they once were and limit your investment options.
However, a self-directed IRA (set up as a Roth, Traditional, or SEP) allows an investor to invest in alternative investments that are largely insulated from broader market trends to help fund retirement savings. This can help them continue to build wealth towards retirement even in uncertain conditions.
Both self-directed Roth IRAs and self-directed traditional IRAs allow investments in areas like cattle, precious metals, real estate investing, and many more!
With this flexibility with an IRA investment, it’s no surprise that self-directed IRAs are on the rise. A PwC report even predicts that the global alternative asset industry will increase to $15.3 trillion by 2020!
What to look out for when investing with a self-directed IRA (SDIRA)
IRA Rules & IRS Rules For A Self-Directed IRA
Self-directed IRAs can adhere to either traditional or Roth IRA income tax rules.
With self-directed IRAs, the emphasis is on the asset class and the SDIRA custodian. The IRS dictates that all IRAs must be held by a custodial entity (bank, provident trust, etc.). These entities must not provide any investment advice to an account owner by acting as an investment advisor.
Generally, brokerage firms shy away from self-directed IRA accounts due to numerous prohibited transactions. The IRS defines these prohibited transactions as “any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person.”
While alternative investments have their fair share of complications, an experienced IRA custodian can help you alleviate most of your concerns.
Choosing the best self-directed IRA custodian or administration for your IRA funds requires you to research a few things thoroughly.
Here are the features you should be looking at when selecting the best self-directed IRA custodian:
1. Diverse Investment Options
A self-directed IRA expands your investment opportunities beyond stocks, bonds, and mutual funds. The best self-directed IRA custodian should be able to administer and custody a varied portfolio of investment options—ranging from private company stock including start-ups and crowdfunding offerings, cryptocurrency, private equity, private funds, promissory notes, and other alternative assets.
With Alto as a custodian, you’ll have total control over the assets you want to invest. Alto lets an investor invest in diverse assets like startups, real estate, loans, and more through its platform partners like AngelList, Silicon Prairie, Carofin, and more.
For added IRA investment flexibility, Alto also lets you invest in opportunities outside these partner platforms.
You can even bring your own deal to invest in with an Alto IRA. Each individual investor will need to do their research and due diligence on what assets and alternative investments are best for them.
2. Transparent Fee Structure
Apart from the usual IRA account activation fees, there may be other miscellaneous expenses in the pricing model of a self-directed IRA custodian. These additional expenses may or may not be clearly defined. For example, an IRA custodian may charge exorbitant fees based on your retirement account balance while another may charge brokerage commissions for making successful financial trades.
Alto, however, offers you a simple, low-cost, and transparent model.
3. Simplified Investing
Investing in alternative assets through self-directed retirement plan accounts can be complicated due to numerous IRA rules. If you don’t have the right IRA custodian, this can be a confusing DIY investment involving a lot of paperwork and due diligence.
With an IRA custodian like Alto, The Alternative IRA™ platform, investing with a self-directed IRA becomes easy and streamlined—saving you time, money, and frustration. For example, AltoIRA includes the recipient of funds (the company/asset you are investing in) in the transaction process. This makes documentation and signature gathering trouble-free for all parties.
Dealing with a self-directed IRA can be a complex and confusing process. You have to monitor each investment and handle all the transactions. Manually doing all this can be incredibly tedious and time-consuming.
Luckily, you won’t find any of these issues to be roadblock with Alto as your custodian. With its simple online interface, in-depth FAQ section, and responsive customer service, you’ll have everything you need for a streamlined experience. Alto takes away the mundane headaches so that your time is utilized in finding the right investment for your IRA.
Making an investment with a self-directed IRA doesn’t have to be a complicated process.
With Alto as your SDIRA custodian, investing in startups, digital assets, real estate, and more can be incredibly simple.
The earlier you start contributing to your IRA, the more money you can potentially make. So, why not get started with Alto right away?