By J.P. Dahdah, Founder & CEO of Vantage
With freedom comes responsibility.
Self-Directed IRA (SDIRA) account holders are not immune to this reality. I regularly share my insights about the long list of powerful benefits SDIRAs, but there are hurdles to these accounts as with most things in life.
The burdens exist within the realm of personal accountability.
Building wealth is very hard to do, but when you are an SDIRA investor, you must never overlook the work associated with the words “self-directed.”
The brokerage company IRA industry is built on a digital-based environment focused on automating everything. Buy and sell transactions are complete with a few mouse clicks. Monthly retirement savings sell via the concept of “dollar-cost averaging” via ACH debits from your bank account. All holdings are valued daily and are viewable on mobile devices. Hence, you are never more than a blink away from your portfolio snapshot.
In the alternative investment world of Self-Directed IRAs, the opposite is true.
Like Vantage, alternative asset Custodians and Administrators help facilitate investor transactions and provide the IRA reporting services the IRS requires. Still, the individual account holders bear the majority of the workload on their shoulders. There is a lot of paperwork, signatures, investment research, and learning that is the individual investor’s responsibility. That’s why anyone who has heard me speak publicly knows I emphasize that SDIRAs are NOT for everyone.
To fully understand the value of Self-Directed IRAs, you must embrace the benefits and tolerate the burdens.
We have to take the few annoying realities with the long list of great things SDIRAs offer. Do I like filling out my Fair Market Valuation (FMV) form every year on all my IRA alternative assets? Heck no! Am I thrilled about completing a stack of documents to buy and sell my retirement holdings? Nope. I do it because I have to reap the immense benefits of investment returns. I expect my IRA to receive in the long term from the alternative investments I have chosen.
We offer our clients e-signature capabilities to reduce the paper-intensive aspects typically involved with the SDIRA process, but the entire experience can’t be 100% digital at this time. With the emergence of alternative asset marketplaces and technological innovations such as blockchain, we believe it is merely a matter of time before most SDIRA investing burdens are a thing of the past. For me, the empowering benefits of SDIRAs vastly outweigh the hurdles. Still, each Self-Directed IRA account holder must decide if they share my sentiment and look past some of the nuances to reap the upside.
Happy Investing!
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