Retirement is a major life event, and you need to be ready to take on the challenges it brings.
You cannot expect to pocket your monthly paycheck after retiring, but expenses may grow as you age.
It makes sense to secure your future with good retirement planning, and an individual retirement account (IRA) is the ideal solution.
Traditional IRAs include common investments like stocks, bonds, and mutual funds.
But a self-directed IRA is a more flexible option as it enables you to explore a broader range of investment possibilities.
The good thing is that the legal structure is the same, and so are the annual contribution limits and tax advantages. You only need to know more about the assets you can acquire in a self-directed IRA. Here is a list you can explore.
1. Gold and Precious Metals
Investors consider gold and precious metals real money as they offer inflation protection.
They are also popular from the diversification perspective, while you can rely on them for preserving wealth. The best part about these assets is that you need not worry about their stability even when the economy is not in great shape.
But they are more suitable if you have a long-term vision.
2. Bitcoin and Cryptocurrencies
Cryptocurrencies such as bitcoin are a relatively new investment option, but their popularity is booming.
They are a good way to diversify your portfolio, provided you pick them judiciously. Make sure you understand the market volatility and start small.
Holding crypto investment in a tax-advantaged account is a wise move as they are considered capital assets.
3. Real Estate
Buying investment properties is another option self-directed IRA account holders can explore.
But there are a few basics about self-directed IRA Real Estate you must know before going ahead. You cannot invest in a property you intend to live in.
It is equally important to avoid mixing your personal and IRA funds. Simply speaking, you must pay the expenses, taxes, and insurance of the investment property only from the IRA.
You can consider investing in a business within a self-directed IRA. But you will have to follow the rules related to the ownership of a business in a self-directed IRA.
For example, you cannot invest in one that benefits you before retirement because it defeats the purpose of retirement planning. Things can get complicated with this form of investment.
So it makes sense to connect with a professional financial planner to guide you.
5. Debt Instruments
Another asset you can buy in a self-directed IRA is debt instruments like tax liens and loans. You can explore a reputed debt-investing platform to pick such instruments.
These investments generate significant interest income year after year, so you can see your retirement savings growing with time. It is best to collaborate with an expert to guide you regarding investing in debt instruments.
Collaborating with a custodian is the best way to invest and manage your self-directed IRA. They may specialize in different types of investment, such as real estate, so make sure you find one that aligns with your long-term strategy.