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Alternative Investments

A Beginner's Guide to Diversifying Your Portfolio

What Are Alternative Investments?

Alternative investments, also known as alternative assets, are financial assets that do not fall into the standard investment category of stocks, bonds, and mutual funds. Alternative investments can potentially complement your standard investments in your retirement portfolio. They can also hedge against inflation and potentially create higher returns.

There are a variety of exciting alternative investment opportunities that standard IRAs typically do not offer. Some alternative investments examples include real estate, precious metals, private equity, and promissory notes.

Alternative Investments at a Glance

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Diversify Your
Retirement Portfolio

Alternative investments can complement your standard investments, diversify your retirement portfolio, and potentially reduce overall risk.

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Potential for 
Higher Returns

Historically, alternative investments tend to outperform standard Wall Street products and can provide a hedge against the stock market.

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Greater Investment Choice

Utilize your expertise to invest in assets you understand and believe in, whether that be real estate, precious metals, or another alternative investment.

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Tax Advantages

When you invest in alternative investments with your Self-Directed IRA (SDIRA) you can grow your retirement savings within a tax-advantaged account.

Understanding Alternative Investments

When asked about investing, some might default to discussing more widely known investments like stocks and bonds. However, there are a variety of alternative investment options that allow you to diversify your retirement portfolio and hedge against the stock market. You may be wondering, “what are alternative investments?”, “what is the difference between standard and alternative investments?”, and “are alternative investments right for me and my retirement planning strategy?” Madison Trust’s Self-Directed IRA Specialists can help answer your questions about alternative investments with a Self-Directed IRA (SDIRA).
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You Have Questions? We Have Answers!

Our Self-Directed IRA Specialists are knowledgeable about alternative investments and the self-directed investing process. 
Reach out to us to get the answers you need.
Get Your Questions Answered

Why Hasn't My Brokerage House Offered Me Alternative Investments?

Happy Self-Directed IRA investors smiling and shaking hands with their Self-Directed IRA custodian.
Brokerage houses typically do not offer alternative investment options to their account holders, resulting in most IRA owners only investing in standard Wall Street products. To invest in alternative assets with your retirement funds, you must open an account with a 
Self-Directed IRA custodian who specializes in holding alternative investments.

What is the Difference Between Standard and Alternative Investments?

Standard Investments vs. Alternative Investments Infographic

What are the Benefits of Alternative Investments 
with a Self-Directed IRA?

There are many reasons why you may want to invest in alternative assets:
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Diversification

A diversified retirement portfolio includes a wide range of assets, including both standard assets and alternative investments, to reduce overall risk.

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Potential for
High Returns

Historically, alternative investments have generally provided larger and more stable returns than standard investment products.

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Tax Advantages

When you invest in alternative investments through a Self-Directed IRA, you can receive tax-deferred (Self-Directed Traditional IRA) or tax-free (Self-Directed Roth IRA) growth.

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Tangible

Many alternative investments are physical assets, which can potentially avoid the negative effects of market fluctuations by generally maintaining their value as tangible assets.

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Greater Choice

Utilize your expertise to invest in an asset you understand, believe in, and can help achieve your retirement goals.

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Hedge Against Inflation

Alternative investments typically have a low correlation with standard assets. Generally, if the value of stocks decreases, the value of alternative investments increases (and vice versa), providing likely insurance against inflation and economic crisis..

Interested in Speaking with a Self-Directed IRA Specialist 
About Your Exciting Investment Opportuntity?

Start a Conversation

Types of Alternative Investments

With an SDIRA, you can buy almost any alternative asset. The only assets that the IRS excludes are life insurance, collectibles, and S-corporations. Here are some types of alternative investments you can invest in with a Self-Directed IRA: 

And Many More Alternative Assets

How To Invest in Alternative Assets with a Self-Directed IRA

1
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Open a Self-Directed IRA

Open a Self-Directed IRA with Madison Trust by completing our easy online application.
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Fund Your Account

Fund your Self-Directed IRA by transferring or rolling over all - or a portion of - your funds from an existing retirement account, such as an IRA or 401(k), or by making an initial contribution.​
3
Investor Standing Holding Check Icon to show placing an investment with a Self-Directed IRA.

Place Your Investment

Instruct Madison Trust to send your IRA funds by writing a check or sending a wire directly to your investment.
Get Started

Diversification Beyond Wall Street Awaits

Start a conversation with one of our Self-Directed IRA Specialists to get started on your alternative investing path.
Start Your Journey

Why Choose Madison Trust for Your Alternative Investing?

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Incredible Customer Service
Madison Trust strives to give retirement investors an amazing experience. Every time you call us, you’ll speak with a live and knowledgeable representative.
Secure Investing Platform
Your information is protected both online and offline through encryption technology. Plus, enrolling in our client portal lets you see and manage your account online. 
Low
Fees
Amongst the lowest in the industry, our flat-rate fees help you retain the profitability of your investments.
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Industry Knowledge
Our Self-Directed IRA Specialists complete rigorous CISP training and have a deep understanding of a variety of alternative asset classes. Every answer you get is informed, no matter the alternative investments you choose.
It's time to give your retirement funds an opportunity to grow with Madison Trust's Self-Directed IRA.
If you'd like to get the investing process started or have more questions, our dedicated client support team is here to help! Contact us to learn more.

Are Alternative Investments Right for Me?

Self-Directed Roth IRA owner on his laptop and funding his account via contribution, transfer, rollover, or Roth conversion.
With the greater flexibility of an SDIRA, comes greater responsibility. Account holders are responsible for conducting due diligence and understanding the ins and outs of the investment. Self-Directed IRA custodians are passive and do not give investment advice. It is also important to keep in mind that alternative investments are not as liquid as standard assets.

Before investing in alternative assets, consider evaluating your current finances, risk tolerance, liquidity needs, and overall retirement goals. It is considered best practice to speak with a financial advisor or tax professional before committing to an investment.

Ready to Diversify Your IRA with Alternative Investments?

Start a conversation with our team today to take the first step toward maximizing your retirement portfolio with alternative investments in your 
Self-Directed IRA.
Self-Directed IRA Specialist at Madison Trust shaking hands with an SDIRA investor.
Start Your Alternative Investing Journey

Alternative Investments - FAQs

How are alternative investments taxed?

Self-Directed IRA account holders do not need to file an annual tax return for their IRA funds. However, you must provide your SDIRA custodian with the fair market value of your account each year. 

Since the intended use for your SDIRA investments is to grow your retirement funds in the long-term, your SDIRA may be subject to taxes if it generates business or trade income that is not related to the tax-exempt purpose of the organization (Unrelated Business Income Tax) or if debt is leveraged to purchase an asset (Unrelated Debt Financed Income).

How Can I Withdraw Precious Metals?

Besides investing in precious metals, you can also withdraw your bullion and take direct physical possession of it. If you take a distribution before age 59½, you will have to pay tax and early distribution penalties. The type of metal you receive at distribution depends on how you select to store your metals (segregated or non-segregated).

Segregated Storage – the exact metal you purchased is what you will receive if you sell them or do an in-kind distribution.

Non-Segregated Storage – When you sell metals or complete an in-kind distribution, you may receive "like" metals, which are not the exact metals you purchased. For example, you may purchase 2018 silver American eagles. When you take a distribution, you may receive different 2018 silver American eagles or silver American eagles from a different year.

Can anyone buy alternative investments?

Anyone can open a Self-Directed IRA. SDIRA contributions must be made with earned income. Some investments, such as specific private equity investments, may require you to be an accredited investor.  

On the other hand, other alternative investments such as precious metals and promissory notes generally have an easier entry point.  

In addition, there are investment opportunities like crowdfunding and private REITs that pool capital together from several investors to purchase typically larger, more costly alternative investments.

Are alternative investment high-risk?

Like any investment, alternative investments may involve risk. However, savvy investors recognize that higher risks can lead to higher rewards. It is best practice to speak with a financial professional to determine if alternative investing is right for you. For more information regarding the risk associated with SDIRAs, visit Self-Directed IRA Investor Alert Response.

How do I distribute alternative investments from a Self-Directed IRA?

Complete a Distribution Request Form. If you are distributing an asset, please submit a third-party certified value (i.e., an appraisal, letter from an investment sponsor, CPA-certified valuation, etc.). Depending on the asset, additional documents may also need to be submitted.  

After the documents are submitted and approved, Madison Trust will send you an Assignment of Interest. This documents the transfer of ownership from your IRA to your personal possession.

Ready to start investing in your future?

Reach out to our team, and we’ll answer any questions you may have.
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