Does reviewing your IRA performance feel like a day at a Six Flags amusement park?
We’ve all watched the volatility of our stock markets the past two decades. While the general tendency and trend has been up, there have been some disconcerting downs, and choppy periods with little progress. This raises the question, is there an alternative?
Did you know?
You are allowed to self direct your investments within your IRA! You have been able to since the ERISA act in 1974 set up IRA’s as a tool to help Americans take responsibility for their own retirement.
What can I invest in?
Surprisingly the list is quit broad, the Internal Revenue Code only specifies what you CANNOT invest in.
You CANNOT invest in:
- Life Insurance
- Stock of Sub-Chapter “S” Corporations
What is allowed:
The list of possible asset types or eligible investment structures is virtually limitless and Real Estate is a vehicle that has great potential to help you build a solid retirement program. You can invest in almost anything as long as the transaction is for investment purposes and does not create a prohibited transaction (with a disqualified person).
Why haven’t I heard of this before?
That answer is pretty simple really. The Financial industry has done a tremendous job marketing their products and services to the American public as the primary vehicle for retirement. According to a 2005 Investment Company Institute here is the breakdown of where retirement dollars are placed:
- Brokerage companie 38%
- Life Insurance Companies 9%
- Mutual Fund Companies 45%
- Banks 7%
A second reason you may not have heard, is that until the past decade few who used IRA’s participated in this option. There was a lack of public knowledge about how the IRS regulations worked in regards to setting up self directed accounts. This is changing and there are now a small but growing contingent of companies across the country who’s focus is providing the “special custodial asset” services that this requires
As a business executive or professional, a small company owner or entrepreneur, you may have had the foresight and ability to fund one of the programs created by our government with special tax benefits, to provide for your retirement, examples being traditional IRA, 401k, 403(b), 457, Sep IRA, SoloK or Roth IRA, and others. You may be apprehensive that another market drop within a few years of retirement may throw all your diligent planning into turmoil.
Just how much did your IRA grow last year? We can’t tell you how often we have heard prospective clients say, “My IRA is with my bank or my broker and I don’t pay much attention to it”.
It is time to learn about ways to invest in a self directed IRA account.