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What Is a Self-Directed IRA?

What Is a Self-Directed IRA

Most people understand traditional and Roth IRAs, 401(k)s, and even SEP and SIMPLE plans for small business owners. But, one question we hear frequently is, “What is a self-directed IRA?”

The answer is easy: It is a powerful tool individuals use to reach their retirement planning goals. Self-directed plan owners control their funds and the type of investments their plans purchase. So, If that describes you, it’s also time that you learn about self-directed IRAs.

Why should you learn about a Self-Directed IRA?

Self-directed plan and a retirement plan housed with a bank or a typical custodian differ in two ways. First of all, self-directed plan owners invest in alternative assets rather than stocks, bonds, and mutual funds. Additionally, plan owners choose their own investments; they do not rely on a third-party to do so. These differences are especially relevant to those who want control of their investing funds and decisions.

Alternative assets (like real estate or hedge funds) grow income in the plan just as any traditional asset does on a tax-sheltered basis. And, the account owners choose investments based on their own knowledge and experience. Alternative assets have the potential to earn better returns in a shorter length of time than traditional assets. Individuals choose rentals, land, private equity, gold, private lending options, and much more to achieve their goals.

What Is a Self-Directed IRA infographic

Midland IRA is a self-directed retirement plan administrator serving clients across the nation. Our clients have the Freedom to Invest™ in what they know best. Our clients use many alternative assets to earn tax-sheltered income. To retire successfully, diversity is key. Understand your options. Make your own decisions. Open a self-directed IRA with Midland today.