Self-Directed IRAs and Alternative Investments: What You Should Know

There has been much discussion lately in the financial world regarding the popularity alternative investments are gaining. A viable alternative investment can potentially score higher gains at a faster pace than more traditional methods may. Self-directed IRAs are also getting recognition, as these accounts allow a very large pool of asset types not available in the typical IRA. Why? Because, the average IRA custodian limits investors to options they sell which are typically the more traditional options such as stocks, bonds, and mutual funds. Those who use these custodians are comfortable allowing their account managers to pick and choose investments for them—from the limited, traditional offerings on the firm’s menu.

A self-directed IRA administrator like AdvantaIRA serves individuals who want to control their own investment funds and make their own investment choices. These are people who take an avid interest in their retirement portfolios and are actively participating in making sure their financial futures are secure. These individuals understand they can invest outside of the box and refuse to be tied down by inexperience, fear, or tradition.

Since their inception in 1975, self-directed IRAs have steadily become the savvy investor’s choice to build wealth for retirement. While self-direction may seem like a lot to grasp especially if you’ve never participated in choosing your own investments before—the premise is actually fairly simple: invest in what you know best. And, in the world of alternative investments you can surely find a few options you are familiar with.

This does not mean ditch the stocks, bonds and mutual funds you may already have; simply add to them or redistribute the assets in your current portfolio to include a comfortable percentage of both traditional and alternative assets. After all, diversity is a key element of success for any investment portfolio. When it comes to alternative investments, diversification opportunities are nearly endless.

If your background is in real estate perhaps acquiring property for resale or rental income would be your niche. If your business acumen is spot-on you might consider exploring the world of private placements, invest in a business, an LLC, or trying your hand at private lending opportunities such as loans and mortgages. You want to raise cows or chickens or Arabian horses to earn money towards retirement? Go for it. You might be a foreign exchange or futures trading guru, a precious metals buff, or a stock market wizard—all of these assets and many more are permissible within self-directed IRAs.

Other examples of alternative investments include:

  • Oil and gas opportunities
  • Accounts receivable
  • Timber rights and options
  • Alpaca farms
  • Heavy equipment trading
  • Tax liens and certificates
  • Secured and unsecured notes

The list goes on…

The only things not allowed in self-directed accounts are life insurance contracts and collectibles. Other than that, the possibilities are really quite endless provided they fall within IRS regulations.

You can even partner your IRA funds with another IRA or individual for the purpose of acquiring an asset your account could not afford on its own. Provided you are not doing business with disqualified persons or performing a prohibited transaction these types of investments can be very advantageous.

It is important that you perform due diligence in all realms of self-directing your retirement accounts. Choosing the right administrator is just as important as consulting with knowledgeable professionals such as a financial advisor or certified public accountant to ensure your account operates in compliance with regulations. Once you have the key players in place, you should fully vet all elements of each investment you consider.

If an investment opportunity comes your way but you do not know much about it, you can learn! Advanta IRA offers webinars and live seminars designed specifically to teach investors of all levels about self-direction and the world of alternative investments. These courses are offered at no cost to attendees—the goal simply being to empower participants who want to take control of their own retirement funds and learn more about how self-directed IRAs work. The benefits can be plenty, but there are risks involved, as well. However, the more you know, the better you are able to achieve the financial freedom you desire upon retirement.

For more information about this article or if you would like to learn more about self-directed plans, please contact Kevin Collins at AdvantaIRA Trust by calling (617) 830-1070 or email


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