Asset Choice in a Self Directed IRA

A Self Directed IRA empowers investors to expand their choice of assets. In a standard IRA, the account holder is typically limited to stocks or other market products. With a Self Directed IRA, the investor is able to profit on almost any asset. Currently real estate and private placements are two of the most popular self-directed assets. Promissory notes are also gaining popularity as investors begin to realize their value.

Real Estate

Real estate is a prime asset for a Self Directed IRA because it brings together three unique elements.

  • Knowledge – Investors can invest in a property that they have personally inspected and feel comfortable in its income potential.
  • Management – Unlike most investment assets, a piece of real estate can be fully managed by the Self Directed IRA account holder. That means the power is in their hands to direct the investment successfully.
  • Profitability – Real estate often provides great value. The property itself can grow over time, it can bring in steady rental income, and in provides stability to avoid a full loss.

Would you like to learn more about how to invest an IRA in a property? Visit our page “How To Buy Real Estate” to get a simple synopsis of the process.

Private Placement

A private placement typically refers to investing in a non-market asset such as a private equity fund, start-up, or real estate venture. There are two reasons why this is a popular investment for a Self Directed IRA.

  • Availability – These investments can not typically be accessed from a standard retirement account, and instead require a Self Directed IRA which can invest in alternative assets.
  • Funding – A private placement will often require the funds be held in the asset for 3-5 years. This may not sit well with standard accounts where investors want liquidity, but it works great for a retirement account where the funds are anyways inaccessible.

To learn more about investing in a private placement, please visit the private placement information page.

Promissory Notes

Promissory notes are investments that take the form of a loan. If an individual or company needs funding, your Self Directed IRA can offer them a loan at a set interest rate. The appeal of promissory notes is that the profits are determined in advance. Assuming you have a credit-worthy recipient, you should know exactly how much the loan payments will be and over what period of time. This differs greatly from a standard asset where the profits are unpredictable until they actually occur. To learn more about this kind of investment please visit our dedicated page: Promissory Notes.

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Getting started is easy

1

Speak with a specialist

You’ll be asked a few simple questions to make sure that a Self Directed IRA is your best option.

2

Open an Account

Madison will guide you step-by-step through the process, including any necessary transfers.

3

Invest

Your funds will be invested directly into the asset of your choice.


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