Why Self-Directed IRAs are the Ideal Investment Option for Creatives

Written By: Daniel Gleich

Key Points 

• Investing in a film or television production via your Self-Directed IRA (SDIRA) incorporates your creative side with the potential to accrue retirement savings.
• If you harbor a passion for music, investing in royalties of an artist you enjoy is a possible Self-Directed investment.
• You can partake in creative genius by investing in intellectual property, such as trademarks, patents, and copyrights. All three are typically prominent in the fashion industry.
• Businesses and even real estate can also serve as creative investment vehicles. Self-Directed IRAs open the door to a beacon of cultivated organizations, artists, and ideas.

Concerning the future, preparation is crucial. Saving the funds necessary to retire securely is a well sought accomplishment. Many prospective investors are inclined towards creativity and yet remain uninformed about the variety of creative investment opportunities that exist. 

An astonishing array of artistic alternative assets are available for investment through a Self-Directed IRA. You can relish your interests while potentially acquiring deep pockets, regardless of your preferred medium. Simultaneously, you’ll be saving for your retirement within a tax-advantaged account. 

Rolling! Take Your Self-Directed IRA to Streaming or the Silver Screen

Stars are in your eyes, and you carry a passion for cinema. Let’s say you’ve determined that the alternative investment of your choice is a theatrical production. By utilizing your Self-Directed IRA to invest in the production, you get to play a developmental role in a project that has captured your enthusiasm. 

Many streaming services and major networks view content as king. By instructing your SDIRA custodian to send funds directly to production, you’re helping said project get created. Investing in production with your SDIRA lets you assist a distributor in discovering new, entertaining content for their subscribers. Moreover, you’re backing visual art that resonates with you on a personal level. You’re helping to obtain the appropriate funds to film a particular story.  

Your Favorite Tune May Bring Money into Your Self-Directed IRA (SDIRA)

If you have an affinity for music but lack the expertise of a powerhouse vocalist or an award-winning composer, you can still take part in your beloved field. Investing in music royalties is possible with a Self-Directed IRA. Music royalties are typically uncorrelated to the performance of the stock market. This arranges them as conceivable alternative assets to invest in through a Self-Directed IRA. 

Streams, album sales/downloads, usage in commercial/film/television, and more, can accumulate music royalties. These are typically long-term investments that help pay for the artist, which prompts the possibility for substantial appreciation. If you choose the right songs, you could potentially have an ever-flowing source of revenue.  

You may additionally opt to invest in a private song management company. This business model centers around securing music catalogues. 

The Triple I: Invest in Innovative Ideas

Beyond music, there is a plethora of exciting investment opportunities structured around intellectual property. Intellectual property refers to creations of the mind. These creations procure licensing to forbid stealing ownership. The type of intellectual property you would invest in is contingent on the specifics of the creation. 

Investing in intellectual property helps add a shield of protection atop creative ideas. You set the seal so that outside parties cannot copy the materials. You have the capability of investing in books, screenplays, music, and varied artwork all through your Self-Directed IRA.  

It’s important to note that investing in copyrights is different from investing in antique artwork or actual artwork itself. The IRS prohibits IRA funds from investing in collectibles. The IRS considers artwork a collectible item, but not copyrights. Investing in a collectible would be a prohibited investment. 

Self-Directed IRAs Are All the Rage

Those with an aptitude for style will be happy to learn that all forms of intellectual property are generally significant in the fashion industry. A fashion line’s recognition tends to derive from the brand’s name and/or logo design. Establishing its trademark is vital in preventing others from creating dupes or stealing its likeness. 

Two specific patents are typically prevalent in fashion: a designer patent and a utility patent. If a designer creates an item immersed in intricate detail, a designer patent may be in order. For all clothing items built with a unique functionality, a utility patent would be the better suited option. 

You can also copyright clothing items, so long as the item in question has the proper measure of creativity. It needs to be considerably different from something that would primarily serve as functional. This grants the clothing item the identify of an “artistic work.” 

Like all investments, there may be risk factors with investing in intellectual properties. Researching and performing due diligence on a prospective investment is considered best practice. Once you resolve all concerns, you can be on your way to growing a potentially impressive return. 

Be Creatively Business Savvy with Your SDIRA

Private businesses, LLCs, and real estate are some of the most popular alternative investments among SDIRA investors. If you’re interested in supporting a creative venture, you can simply provide capital to their pursuit. You can achieve this through a hedge fund, startup, crowd funding, or private REIT. 

If real estate is more up your alley, you may consider investing in commercial real estate for a creative purpose. Purchase a central office for a creative business, or provide additional residency, gifting them the ability to expand.

The types of creative businesses that exist are vast. Many institutions focus on music, performing arts, literature, fine art, fashion, cosmetology, interior designing, party planning, and miscellaneous art. Through investments affiliated with these mediums, you can stay grounded in your creative roots while growing your retirement savings. 

Conclusion: For the Artist, the Showman, and the Maestro

Self-Directed IRAs are wonderful investment instruments for those who are creatively inclined. Investing in a creative business, intellectual property, or theatrical production allows you to diversify your retirement portfolio all while investing in something you know and believe in. 

Let Madison Trust Be the Haven for Your Self-Directed IRA

Are you new to self-directed investing? We’ve got you covered! Here at Madison Trust, we pride ourselves on maintaining top-tier customer service and celebrating client victories. If you’re curious about investing in creative endeavors, schedule a free discovery call today.