Self-Directed IRAs and Your Retirement

by Spencer Cullor on June 25, 2011

Self-directed IRAs give you the power to invest your retirement savings into investments that you know and understand and achieve returns in excess of traditional IRA options.

What is a Self-directed IRA?

Self-directed IRAs are practically the same as normal IRAs. The only difference is that you are able to choose where your money is invested from all of the available investment options (stocks, bonds, real estate, businesses, or even apartment complexes) instead of being limited to traditional IRA investments such as stocks, bonds, and mutual funds. This is very attractive, especially for those who have investment experience and who know how to manage their funds in order to obtain maximum profit while still enjoying all the benefits of traditional IRAs (tax deductions, tax-free profits, and estate planning).

Benefits of Investing Self-Directed IRAs in Real Estate:

  1. Taxes: Self-directed IRAs allow taxes on assets held inside the IRA account to be deferred or postponed until the money is withdrawn from the account at retirement. With alternative investments, account owners can take a more proactive approach toward improving investment returns because they can choose assets that are not publicly marketed. Additionally, if invested in real estate, taxes on appreciation and rental income are deferred, so an investor can grow his or her portfolio at an even faster rate.
  2. Diversification: Account holders can make both traditional and alternative investments within self-directed IRAs. The self-directed IRA allows people to diversify into many different assets.
  3. Control: With self-directed IRAs, you will be able to take control of your retirement savings and invest your money in investments that you understand. You aren’t stuck waiting for the ups and downs of the stock market to determine your return.
  4. Multiple Streams of Income: When investing in real estate, you can benefit from Appreciation of your asset, Cash Flow generated, and Loan Principal Pay-down by your tenants.

What can I invest in with an Self-directed IRA, and what is not allowed?

Self-directed IRAs are specialized accounts that allow their holders to invest in anything except for life insurance, collectables, and investments that would personally benefit them or close family members, as restricted by the IRS. Real estate, private placements, and businesses, among other things, are common investments within self-directed IRAs. Be sure to refer to a knowledgeable self-directed IRA advisor to find out if your desired investment is qualified.

Ready to get started?

Let Cullor Properties guide you through the process of setting up and investing your IRA or old employer 401K and refer you to a knowledgeable advisor. A retirement account custodian can provide the most up-to-date information regarding your retirement account diversification. Regulatory knowledge and customer service throughout the investment process are essential elements for every diligent account owner.

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{ 6 comments… read them below or add one }

Isobel Heird January 18, 2012 at 9:29 pm

thank you for all your efforts that you have put in this. Very interesting info. “Live with men as if God saw you converse with God as if men heard you.” by Seneca.

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invest liberty reserve February 29, 2012 at 6:18 am

Hey There. I found your blog using msn. This is an extremely well written article. I will be sure to bookmark it and return to read more of Self-Directed IRAs and Your Retirement . Thanks for the post. I’ll definitely comeback.

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Spencer Cullor February 29, 2012 at 7:02 pm

Thank you. Glad you liked it.

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Adhew March 9, 2012 at 2:50 pm

First of all,, it’s illegal for any stock berkor or his agent to guarantee an investor anything. Therefore, you may, or you may not realize a 7% return on a “safe” investment. The return may be more,, or it may be zero, and there’s a possibility it could be a negative return,, meaning you lost your butt, and your money. With $500k, I would suggest you diversify your investment,, in other words, don’t put all your eggs in one basket. Invest part of it in real estate, part of it in mutual funds if you don’t understand the stock market, and part of it in short term investments. You never know when you might need to liquidate an asset to survive a catastrophic event. The price of real estate is determined by supply and demand,,,, demand will continue to increase while the suppy will continue to decline,,, space occupied must be subtracted from space available. That’s why a rental property that cost $50k 10 years ago now sells for $100k. In the meantime the investor has enjoyed a rental income (most rental investment properties are expected to yield 1% per month X .8 occupancy rate) which has doubled over the life of the investment to keep up with inflation. For example; a $50,000 investment should get $500 per month in rent or $6000 per year. 6k / by 50k = 12% for a starting point. The amount invested is not going to change, but the amount of rent recieved will increase right along with inflation and after 10 years the rental income will be $12,000 per year or 24%. If prices double again after 20 years, the rental income will equal 50% of the initial investment, or $25,000 per year. Now,, compare that to a “safe” investment. Property will continue to increase in value. How much depends on where it’s at,,References :

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popok bayi April 6, 2012 at 5:03 am

Hello There. I found your blog using msn. This is a really well written article. I’ll make sure to bookmark it and return to read more of Self-Directed IRAs and Your Retirement . Thanks for the post. I’ll definitely return.

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