The Unbelievable Truth about Self-Directed IRAs

So you have finally decided to get yourself a retirement account so you can spend your golden years with a good amount of money at your disposal. But you are feeling a little bit overwhelmed by the number of choices available to you. You can’t seem to decide between a 401k that your employer has offered to set up for you and a self-directed IRA that you have just come to know about. Well, the answer depends on what type of person you are. Are you a risk-taker who likes to make adventurous decisions and enjoy the equally profitable rewards? Or are you the boring type of person who doesn’t like changes in his life and is happy spending every week exactly the same?

Assuming you are the second type, you should go for the self-directed IRA. You will have more control over your money and you will also be able to invest in non-traditional assets like real estate and gold bullion. With a 401k, you can only gain small monthly profits by investing in stocks, bonds and mutual funds.

Another thing you probably didn’t know about self-directed IRA is that it is remarkably easy to set up if you get help from a firm that specializes in the opening of these accounts. An investor new to this business will no doubt find plenty of difficulties while trying to do all the work on their own.

The self-directed IRA is not the most popular choice because most people do not like to take too many risks while making investment decisions. They like to play it safe and stick to the stocks, bonds and mutual funds through their 401ks. Another reason is that the self-directed IRA is perfectly legal and is not only permitted by the IRS, but investors are also encouraged to open by the government body to open this retirement account. There is a lot for the account-holders to gain through the self-directed IRA and not so much for brokers. This is why a large amount of advertising is not deemed a necessity.

The self-directed IRA account is opened up with an individual broker rather than with a mutual fund company. The amount of control you will have over your self-directed IRA can vary. Some brokers misuse the term “self-directed” and give their customers a traditional IRA under the guise of a self-directed IRA. This means that the account-holder will not have too much control of their money and the broker will need to be contacted every time a transaction is to be conducted.

With a true self-directed IRA, you would want be handed the checkbook for your account so that you can pay for potentially lucrative investment opportunities on the spot. Also, you will want to be able to invest in anything you want (barring collectibles, alcohol and some other stuff) and not just stocks, bonds and mutual funds.

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The Unbelievable Truth about Self-Directed IRAs