By J.P. Dahdah, Founder & CEO of Vantage
Setting up a Self-Directed IRA account can help you make wise investments to grow and expand your wealth. With a Self-Directed IRA, you can diversify your portfolio while also limiting your risk. There are ample alternative investments in comparison to what brokerage IRAs allow, but they do have some limitations.
Here are some investments to avoid, which will help ensure you follow all rules and regulations when it comes to properly allocating investment funds from within your Self-Directed IRA account.
1. You can’t invest in family. Due to rules and regulations, you cannot use your Self-Directed IRA to invest in lineal family members (i.e. father, mother, children, and grandparents) who own a company or are seeking capital to start a company. Your Self-Directed IRA must be used to invest in independent instruments to building your portfolio.
2. You can’t invest in a company you have ties with. If you are a controlling investor, a partner, hold a high position or are paid high distribution amounts, you will not be able to use your Self-Directed IRA if your company or the company you have a working relationship is seeking capital. Rules and regulations keep you from investing in companies or private investments that can be a conflict of interest.
3. Using funds to purchase a home to live in. If you want to make a real estate investment using your Self-Directed IRA, you can certainly do so as long as you understand you can’t live in this home. Rules and regulations require that real estate investments be done under the premise of either renting the property out or fixing it up and selling it for a profit.
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or ClientService@VantageIRAs.com.