What is the Difference between a Brokerage IRA and a Self-Directed IRA?

 |  General Self-Directed IRAs
brokerage IRA

By J.P. Dahdah, Founder & CEO of Vantage

The difference in investment choices is what truly separates a brokerage IRA and a Self-Directed IRA. They both can allocate funds for traditional investment options like stocks, bonds, and mutual funds. Unfortunately, that is where they cease to be alike, and deciding between the two comes down to how much work and research you are willing to do.

1. Investment options. With a Self-Directed IRA, you have the luxury of choosing both traditional investment options like stocks and bonds and private investments like precious metals and real estate. A conventional IRA affords you very little flexibility, and often investment companies will convince you to invest your retirement funds in their stock. While this may benefit their bottom line and help grow their stock price, the truth is, this method may offer you very little to nothing in return.

2. Less regulated investments. Traditional IRA investments must follow all regulations and laws put in place by the SEC. When a company tries to sell shares, they are required to make their financials and other important investment documents public. This can help give you a better understanding of what you are investing in. A Self-Directed IRA follows these rules for investments in the stock market, but private assets like real estate make sure you get full disclosure is solely your responsibility. You will be required to be more diligent when using a Self-Directed IRA, but the freedom that comes with the extra work could pay off should one of your investments surpass its monetary goals.

For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or ClientService@VantageIRAs.com.