By J.P. Dahdah, Founder & CEO of Vantage
Most investors do not know that alternative investment opportunities exist within an IRA. According to estimates, about 45 million Americans have an IRA, but fewer than 4% of us hold any non-traditional assets.
Although more and more people are catching on, before you become a Self-Directed IRA investor, you should ask yourself a few questions:
- Do I have sufficient knowledge to support my Self-Directed IRA choices? You do not need to be an expert. However, when you choose a Self-Directed IRA, you are choosing to be in control and that means you need to ensure that you have the knowledge necessary to ensure you understand and follow all the IRS rules and regulations.
- Do I have enough money in my IRA to invest in the assets I want? We have found that once you reach a balance of $50,000 you are in a position to start investing. You can pay cash, partner with others or even leverage the money in your IRA to take advantage of other people’s money.
- Do I know a qualified IRA custodian? The rules surrounding a Self-Directed IRA can seem complex. This is where a worthy Self-Directed IRA Custodian is crucial. They are specialists in the law and rules surrounding a Self-Directed IRA. They also process investments on your behalf, but under your direction. You will need to trust this company and have more than a “good” working relationship with them. Make sure you find a Custodian you are comfortable working with.
- Am I goal-oriented and self-motivated? If you are not the type of person who likes to set goals and work to achieve them, a Self-Directed IRA might not be for you. The investor who is most successful with a Self-Directed IRA is the one who is willing to do some legwork in order to earn a heavy-duty return on investment. Do not be intimidated by the work, just make sure you are willing to do it!
- Am I willing to take some risks? Like any investment strategy, using a Self-Directed IRA carries risk. The good news is that you are in control and are in a better position to manage that risk.
If you have a Self-Directed IRA, what do you love about it? How did you know it was right for you?