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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Are Self-Directed IRA's right for you? Learn some of the facts about them and see if they would be beneficial to your investing portfolio. What You Should Know About Self-Directed IRAs Besides the Fact That They Actually Exist By Britt Erica Tunick Individual retirement accounts (IRAs) have long been one of the most popular ways for Americans to save for the future, but when it comes to the investment options that IRAs provide the majority are limited to stocks, bonds and mutual funds. For individuals looking to diversify beyond such traditional investments, yet still interested in benefitting from the tax advantages of an IRA, the answer is a self-directed IRA which allows for investments in a much wider range of assets. Unlike traditional IRAs offered by brokerage firms and banks, self-directed IRAs, which are instead housed by custodian firms that merely execute the trades requested by an IRA portfolio’s owner, can invest in everything from real estate, to precious metals, private businesses, promissory notes, tax liens and even burgeoning investment options such as cryptocurrencies, among other options. Though self-directed IRAs may sound like the latest retirement savings vehicle to arrive on the scene, they have actually been around since 1974 when IRAs were initially established. Like many investment opportunities, however, just because self-directed IRAs exist doesn’t mean you should be using one, or that they are right for you. Given that the investment choices of these investment vehicles are entirely in the hands of the individual using them to save, self-directed IRAs should really only be used by sophisticated investors with a deep understanding of the risks and benefits of less traditional investment opportunities. Nonetheless, if a self-directed IRA sounds like something you are interested in pursuing, there are a few things you should know about them. Following are some basic facts about self-directed IRAs:
If a self-directed IRA still seems like an appealing idea, despite the strict parameters for investing through them, you should speak with a qualified financial advisor about where to begin and to find out any other important facts you should know about these vehicles. |
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